With the 2020 durum crop off the fields, cash bids for durum have remained stable in that $5.25-$5.75 range.
“Basically, harvest has finished. (There were) much better harvest conditions this year and the quality better is much better than a year ago, as well, so producers are pretty happy about that,” said Erica Olson, market development and research manager for the North Dakota Wheat Commission.
Looking at some of the preliminary quality data from the annual crop survey report, it shows that test weights this year are averaging 62 pounds per bushel, which is higher than last year and also the five-year average. There was also much lower damage than a year ago and the color was greatly improved. The vitreous kernel content is averaging 88 percent, much better than last year’s 64 percent.
“(The 2020) crop is also showing very strong falling numbers. It’s just a very good grading crop,” Olson said. “We don’t have end use quality yet, but everything looks much improved from last year.”
In its Small Grains Summary, USDA updated its final acreage and production numbers for durum. Final U.S. durum acres came in at 1.7 million acres, which is about 400,000 acres higher than the first estimate in the March planting intentions report. In North Dakota, the final durum acreage number came in at 910,000 acres, up 140,000 from the previous estimate. Montana’s final acreage planted to durum was 690,000 acres, which is about 100,000 higher than their previous estimate.
“Obviously, that higher acreage number kind of satisfied the market even more that our acres came in higher than we even expected,” she said. “However, USDA did lower the yield some, so our final U.S. yield came in at 41.4 bushels per acre, which is down over a bushel from the previous estimate.”
U.S. durum production, even with the increase in acres, only went up slightly from the previous estimate due to the lower yield. Total U.S. durum production is now pegged at 69 million bushels (MB), up from 54 MB a year ago.
On the demand side of things, domestic demand is still fairly good, Olson pointed out, because pasta demand has remained strong throughout the coronavirus pandemic. However, most mills and pasta manufacturers have coverage for most of the remaining year and durum supplies are still viewed as adequate, so the market is not seeing that influencing prices at this time.
Looking at U.S. export demand, there had been some pretty strong early season sales that were well ahead of average, but those have tapered off some recently, according to Olson.
“But we are still about 2 MB higher than a year ago. Our total sales have reached 20 MB,” she said, adding that sales this year are up to Italy, Portugal, Spain, Venezuela and Guatemala. “However, we have seen no sales to the North African region so far, and with the drought that they had this year their import demand will be higher. So it would be nice to capture some of those sales, but so far those supplies have been coming from Canada and a bit from the European Union,” she added.
Regarding the Canadian crop, producers there are finishing harvest, as well. Thus far there hasn’t been any quality data released, but for the most part it appears that Canadian producers have had a good harvest and are expecting a good crop.
Canadian exports are quite a bit higher than a year ago, up about 31 percent from 2019.
“There’s a lag in the destination data for exports, so we only have that through August,” Olson said. “But there’s been a significant increase in sales to Morocco and sales to Europe have picked up, as well.”
In terms of supply and demand data, USDA adjusted U.S. durum production up in the October World Agricultural Supply and Demand Estimate (WASDE) report to match the number in the small grains summary. USDA actually lowered import demand by 5 MB, however, with that increase in production, U.S. durum supplies remained about the same. Usage was expected to remain the same as the previous month.
In the Sept. 1 stocks report, it shows that U.S. durum stocks are about 20 percent lower than a year ago. The report shows that June through August disappearance totaled about 40 MB, which is substantially higher than the past couple years when disappearance was around 20 MB.
“I think that might be overstated a little bit just because they do use those numbers to balance the supply and demand situation,” she said. “But just given some of the early export sales figures that could be part of that higher disappearance.
“Overall, in terms of the North American durum crop, we’re much better off than a year ago in terms of production and quality,” she continued. “But it is important to remember, given the production issues in Europe and North Africa, the world durum stocks continue to tighten.
“I think going forward in the short-term that demand might be the big thing to move prices now that the Northern Hemisphere harvests are done,” she concluded.