Durum USDA photo (0325)

Durum producers are looking ahead to the USDA Planting Intentions Report due out the end of this month, hoping that it gives some direction to the market.

While they await the report, durum prices have been holding steady, continuing to trade in the upper $4 level, according to Jim Peterson, marketing director with the North Dakota Wheat Commission.

“Durum prices have been holding steady with where we’ve been the last month or so, kind of ranging from $4.70 to as high as $5 in a few locales,” Peterson said. “The average is about $4.80 which would catch a lot of the bids. That’s up from early February when prices were in the $4.60-$4.65 range. Obviously, there’s not enough price strength to encourage a lot of producer movement.

“That’s probably why we’re seeing some strength,” he continued. “I think some mills maybe double bought a little bit on the spot market just to offset some of the rail delays we’re seeing.

“On the same hand, as we get further into the next month, road restrictions are going to be coming on so producer movement will be hampered at least by the size of the loads they can haul and, in some cases, just getting in and out of the yards may be difficult.”

Other than that Peterson noted there hasn’t been a lot of new news in the market. Thus, farmers are anxiously awaiting the Planting Intentions Report when they get their first official look at durum acres for 2019.

“There is still a lot of conjecture over what 2019 plantings may be,” he said. “USDA’s planting survey report is based on results of mail and phone surveys to producers in early March. Conditions right now are not a whole lot different from that time, although we’re probably a little more confident that spring will happen at some time.”

During the early part of March, the region was still dealing with 20 degrees below normal temps and snow and producers questioned when snow melt would occur. Now, at the end of the month, Peterson pointed out there obviously has been some snow melting days which has been positive.

“We’ll see what happens going into spring, if we get any heavy snow or rain events which prolong that,” he said, adding that the frost is fairly deep in the ground in a lot of areas so there’s going to have to be a period of warm temperatures to get the frost layer moved up and to warm the soils.

In visiting with producers and local elevators, Peterson feels that durum acres could be down as much as 20 to 30 percent from a year ago.

“That seems to be a pretty good average that catches most areas. Obviously, some will be more and other areas less depending on crop options,” he said.

“I was surprised, presenting at the National Pasta Association meeting in March, that a lot in the industry, meaning millers and grain traders, feel that no more than a 10 percent cut will take place in durum,” he continued. “Either way there’s going to be a market reaction come the end of March, it’s just a question of how significant.

“However, from what we’re hearing from producers and what the industry is expecting, if it comes out closer to a 25 percent cut, I think the industry will hopefully, become more concerned and maybe try to support prices to limit losses,” he added. “Because if we get into a delayed planting season that could certainly open the door for even further acreage cuts depending on where that wet weather occurred.”

In much of the durum area in northwestern North Dakota and eastern Montana there isn’t the amount of snow that eastern/southeastern North Dakota has had so the subsoil moisture in the durum region probably wasn’t as surplus, so Peterson feels that moisture conditions are good, it’s just that the region needs some favorable weather to get the ground ready for planting.

In terms of the little bit of new news, USDA did come out with an updated supply and demand report in March. Unfortunately, from a potential price support perspective, it didn’t go as favorable for durum supply and demand, according to Peterson. USDA raised its import estimate another 4 million bushels from 51 MB to a new total of 55 MB which is a record level.

“Of that 55 million bushels only 18-20 million is pasta or semolina, so the rest is durum from Canada for grinding at the mills, so it’s definitely a hefty number,” he said.

There was no other change in demand numbers so it went right into ending inventories. USDA’s projected ending inventories are now at 49 MB. That compares to 35- and 36 MB the previous two growing seasons. That level of stocks is the highest level since 2000 for June 1 inventories.

“In many respects the market needs an acreage cut in both the U.S. and Canada,” he said. “Just with the level of inventories we’re expecting to have and the level of inventories Canada is expecting to have some contraction in acres would certainly be positive for prices.

“I say that just because of the contracting world demand outlets primarily because North Africa has had big crops the last two years. There are some positive signs there for possible

higher imports there the next two years,” he said, adding that from December through February in parts of Morocco and western Algeria they’ve only had 10 to 15 percent of normal precipitation and that crop is reaching some critical development stages. In fact, there’s already speculation of some yield loss on parts of the wheat crop in Morocco and if it continues into April the Moroccan crop will be much smaller than expected which will be positive for imports.

Central Algeria into Tunisia has fared better as of right now which may temper any increase in Algerian imports unless the weather also gets drier, he noted.

In the EU the durum crop is coming out of dormancy. Drier parts of Spain have received some rain but there are starting to be some concerns in parts of Italy for moisture and so that bears watching.

On the demand side, the current U.S. export pace has not changed much from a couple weeks ago. The U.S. is looking at 17 MB in exports which is up from 13.5 MB a year ago. Italy remains our No. 1 customer with exports almost 70 percent higher. Nigeria is running about three times stronger while Algeria is 3-5 percent less than a year ago.

“USDA is still projecting that the U.S. will reach 30 million bushels by the end of May, first of June. With 17 million on the books as of mid-March we still need to see the pace pick up,” Peterson said. “That certainly could be a price impact issue, but I think the bigger one will be the plantings report coming out the end of the month and obviously what happens with planting conditions here in April and May.”