There’s a saying about beggars and choosers, but to call Canada’s durum customers beggars would be unfair. That said, Italy’s insistence of Country of Origin Labeling of durum that has edged Canada out of its market may ease — all in the name of quality.
Cam Dahl, president of Cereals Canada, says it’s an interesting time in many Canadian commodity markets. Durum acres are likely going to be down about 25%, as plenty of old crop has yet to move and the outlook for 2019/20 demand isn’t much better than last year.
Much of the market uncertainty is centred on Italy, and its COOL rules. “We haven’t seen a shift yet,” Dahl says, in regards to demand coming back online,”but we could see Italy back in the market in late half of this crop year, and that’s because of quality.” While it’s not a strong enough driver to move seeded acres this year, Dahl is at least optimistic the need for Canada’s high quality durum will be a positive for demand later in 2019 and into 202o.
Italy is not Canada’s only durum customer, of course, and Dahl says that there are positive signs of demand from Algeria as well. Private buyers in Algeria, he says, need the quality Canadian durum provides.
Moving on to other non-durum, non-European markets, Dahl says that Saudi Arabia remains closed to Canadian wheat and barley, a market that recently had tenders out for a million tonnes of barley, clearly marked as “optional origin, except for Canada.”
Canadian cereals are pressing their advantage in other markets, however, as the CPTPP offers an advantage over U.S. product into Asian markets. “From August 1 to now, we’e never moved this much product into Asia as we have this year,” Dahl says, with China, a non-CPTPP country, being a big purchaser as well.
China grows a lot of its own wheat, but needs higher protein wheat to blend with domestic production, and that comes from Australia, Canada, or the U.S. Australia has had droughts, and the U.S. has fallen out of favour, politically, and that has favoured heavy buying from Canada.
The Black Sea region is still an increasing competitor in cereal, even as U.S. exports have steeply declined, and Australia has had supply struggles. Canada maintains a quality advantage, Dahl says, and can deliver the volume, but areas of the BlackSea region, such as Kazakstan, are improving their management and infrastructure to more closely resemble what we have on the Canadian Prairies.
Hear the entire discussion between Cam Dahl and Shaun Haney, recorded at FarmTech, here: