Unlike many other markets, there hasn’t been a lot of movement in durum prices for several weeks. That said, durum prices have continued to remain quite strong at over $13 a bushel.
“Durum prices are basically the same as we’ve seen the last couple months,” said Erica Olson, market development and research manager for the North Dakota Wheat Commission. “Prices, as of June 7, were anywhere from $13 to $13.50. I think those price levels continue to be a bit disappointing given the short supplies we have of durum after last year and the slow planting pace we have this year.
“We do have to remember, as well, that we’ve definitely seen some demand rationing,” she added.
The biggest factor is planting progress. USDA’s crop progress report on June 6 showed that just over 60 percent of the North Dakota crop was planted. That is up from 46 percent the prior week, but well off the normal pace of 95 percent.
“It’s quite variable. Most producers in the southwest part of the state are done, but in the northwest it varies quite substantially just depending on location and how much moisture they’ve received,” she said. “I’ve visited with some producers who are completely done and some who are still struggling to get the crop put in because they've gotten more moisture again. Especially in some of those more northern areas, I think we're going to see some unplanted acres for durum. We are getting close to mid-June, so at this point if some of those fields are too wet, they aren’t going to get planted.”
Not surprisingly, crop development has been slow, as well, with just under 30 percent of the crop emerged. That compares to the average of 70 percent.
“Obviously, the good news is we have a lot more moisture this year compared to last year to get the crop going, but in some areas it’s been too much,” she said.
In Montana, about 93 percent of the durum crop has been planted and development is ahead, as well, with 70 percent emerged. Montana benefitted from drier conditions, but conditions are still dry there, so that’s a bit of a concern. Olson said some areas have had some moisture, so it’s improving a bit, but it’s something they continue to watch.
Canadian planting progress is another important factor. The latest report out of Saskatchewan showed 90 percent of the durum crop was planted, and planting was pretty much complete in Alberta. But, similar to Montana, a lot of their durum area is dry, and that’s why they’ve been able to get in to do planting.
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“One of the reasons we’re not really seeing much price movement is we are seeing pretty slow demand,” Olson said. “In terms of domestic demand, we’re starting to see some buyers extend their coverage a bit more into the third and fourth quarters of the year. I do think there’s a bit of nervousness with the delays in planting and also the dry conditions in some areas.
“Another issue that’s impacting the whole industry is rail delays, so in terms of getting durum shipments and also getting product out, that’s been a bit of an issue,” she added.
On the demand side, Olson noted that exports were pretty dismal for the 2021-22 crop year, which ended May 31. Although the final numbers have not been compiled yet, as of the last report, the U.S. had 7.2 million bushels (MB) sold. That compares to 24 MB a year ago.
“The current USDA export estimate was 15 million bushels, so it’s highly unlikely we’ll get to that level. Therefore, we’ll likely see our ending stocks number go higher,” she said. “The current ending stocks estimate is 24 million, so I think we may see higher ending stocks than first expected, unless we get a huge surprise in domestic use.”
USDA will release the quarterly stocks report and the acreage update on June 30, which will give the market a better idea.
Looking at new crop sales, Olson noted the demand situation is looking better. The U.S. sold about 2.4 MB of new crop durum, which is quite a bit higher than a year ago when the U.S. only had about 300,000 bushels in sales. However, it is lower than the five-year average.
“But we’re at least hoping for a better year than this past year,” she said.
Olson also noted that Canadian exports at this point are also way down at about 60 percent lower than last year.
Lastly, the U.S. desert durum harvest is ongoing. Arizona was reporting about 42 percent of the harvest was complete, which is slightly ahead of average.
Looking at the next marketing year, the big thing is that customers are basically counting on a rebound in production in North America, according to Olson, noting that the International Grains Council’s estimates for production call for Canadian crop production to more than double this year and the U.S. crop to about double in size.
“Obviously, the late planting we’ve had, the overly wet conditions in some areas, the dry conditions in other areas, probably makes those estimates a bit more questionable,” she said. “So it’s going to be very important to see what the final acreage looks like and what the crop looks like throughout the growing season.”