The durum market seems to have reached a little stability lately as harvest is nearing the end in the U.S. and producers in Canada are making good progress, as well.
“We really haven’t seen prices strengthen, but they’ve kind of settled in that low to mid-$5 range for milling quality durum,” said Jim Peterson, marketing director with the North Dakota Wheat Commission. “Some locales are a little bit above $5.50, but $5.25-$5.50 seems to be a pretty good average across the region.”
The Minneapolis Grain Exchange has the durum index is at $5.25. When compared to the high in July of $6, that means there’s still some recovery to make. Prices in mid-August were at about $5.50, so current levels are the lowest this calendar year, but still about $.70 per bushel above a year ago.
“As with most years, harvest pressure is not unexpected,” he said. “The price of durum relative to spring wheat is probably a little more attractive, so we may have seen a little more producer selling, especially if their yields came in better than they anticipated.”
Going forward, Peterson indicated it’s going to come down to demand – how many exports the U.S. can line up, and how Canada positions its crop.
“We do have some positives there,” he said.
Looking at the current harvest progress, North Dakota was at 70 percent complete as of Sept. 6. That’s well ahead of last year’s pace of 40 percent. Montana was at 75 percent complete, having harvested a third of their crop during the last week in August and the first week of September as they’ve enjoyed a good run of harvest weather.
North Dakota and Montana did see a killing frost around Sept. 7-8. Although there is some durum that was not fully mature, Peterson said they’re not anticipating any major impact from that frost in terms of quality or yield loss.
“Most of it seems to be mature enough,” he said. “There may be some isolated areas that were a little immature that may be impacted by the frost.”
While producers have had a pretty good run on harvest, yields remain variable. Peterson noted there was good subsoil moisture to go on at the start and it was just a matter of whether producers got rains in time, or depending on their planting times, if the crop was able to root down, get to the subsoil moisture during that dry stretch and then benefit from the rains in late June and July.
“So there certainly are some above average yields in some areas, but there’s also a lot of average to below average yields,” he said.
“Quality has been very good for the most part and well above a year ago thanks to minimal disease pressure during the growing season and a pretty favorable harvest period with not a lot of rain, as well as some hot temperatures to accelerate crop maturity and get it dried down,” he added.
As of Sept. 11, based on 45 percent of the expected harvest samples, this year’s durum crop is grading as a #1 hard amber durum, with 62 pound test weight, which is above last year’s level of 60.5. Damage is only at .7, which is very reasonable, he pointed out, adding that color or vitreous kernel is at 88 percent, which is well above the 62 percent level of a year ago. Falling numbers are higher and protein is averaging 13.7 percent, which as of now, is slightly above last year’s level but below the five-year average.
“That’s probably going to be one area that might be a little deficient in parts of the crop,” he said. “As we’ve gotten into the later harvest in parts of northwest North Dakota and northeast Montana, we have seen some lower protein levels in the 11s to mid-12s. Of course, the market standard is 13 percent, so we’ll see what happens there.
“Certainly a lot of the rest of the crop in other regions is 14 percent protein or higher, so we’re not anticipating an issue for the crop overall. But in some pockets elevators may have a little challenge meeting some of the contract specifications,” he added.
In Canada, harvest was 62 percent complete as of Sept. 7. Looking at their overall harvest of all crops, this is probably their fastest harvest pace since 2017, which is above both the five- and 10-year averages, according to Peterson.
“There have not been a lot of reports on the Canadian crop as yet in terms of quality,” he said. “I would anticipate they may see some lower proteins, as well, and more of their crop may have been vulnerable to the killing frost, but it will take some harvesting to uncover that.
“Canada has seen strong yields, but some of the late heat in August may have taken some of the top end off yield, so we’ll see what happens going forward,” he continued. “There’s no question they have a big crop and it’s going to provide competition, not only in the U.S. market, but internationally, as well.”
Looking at Canadian exports from a year ago, Canada just came out with final numbers for their marketing year, which runs from Aug. 1 to the end of July. The report shows that Canada exported 195 million bushels (MB), which is up 18 percent from the previous year. To put that in perspective, Peterson noted, the U.S. has been averaging 35-40 MB in exports.
Canada was up for the year in total export sales, but down in exports to the U.S. and Algeria. Exports to the U.S. were down 40 percent from the previous year, but Canada had very strong sales to Italy, Turkey and Morocco with roughly 35-40 MB to each of those countries, all an increase of at least 50 percent if not double the previous year.
Looking at U.S. exports, last year was a strong year for sales. USDA is currently projecting U.S. durum exports to be down to 30 MB this year versus 42 MB a year ago. The current sales pace is at 18 MB in sales, which is equal to a year ago. Italy makes up the bulk of that demand with over half of the sales, or 11 MB.
“So that’s a positive and that’s also running about 30 percent higher than a year ago,” he said. “But that pace may decline going forward because we had some big sales to Italy in the October-November-December time frame in 2019 and we’ll see if that happens again this year.”
Where the U.S. is still struggling with export sales, Peterson said, is in North Africa where the U.S. has no sales on the books. Other demand from the U.S. is to Guatemala, Panama and Mexico, as well as Portugal and Spain. He also pointed out that the U.S. made some sales to Venezuela, a country that hasn’t purchased much from the U.S. for a few years.
“We did make some sales to Venezuela, so we’ll see if there’s continued sales there as we go forward,” he said.
USDA came out with its latest supply and demand report on Sept. 11, but had no changes to durum, which is a positive. USDA is projecting record domestic food use of durum. Pasta sales have been very brisk since the latter part of winter with in-home isolation and it has continued strong through to the present. Peterson said they anticipate that will continue through the fall and winter months again this year.
“The other positive is if we look at prices in Europe, they’re $1.50 a bushel higher than a year ago, so there’s definitely some shortages in that market and we anticipate good demand for both U.S. and Canadian durum, he said. “Our prices are also higher than a year ago even though we’ve slumped since mid-summer. With record domestic use in the U.S., I think that’s something that we’ll hopefully translate into further strength, as well as some stronger prices within the European Union market.”