Durum

The coronavirus has created some uncertain, unstable times for the world with the pandemic having a major impact not only on the markets, but also upending our daily lives. That said, it’s somewhat amazing that the durum market has remained fairly stable through the turmoil.

“For the present time, the durum market has remained pretty stable price-wise,” said Erica Olson, marketing specialist for the North Dakota Wheat Commission. “One benefit to there being no futures for durum is that it does have some immunity from the fallout of the coronavirus crisis that has been hitting all of the markets, although it’s not completely immune.

“Cash prices right now are between $6 and $6.50, but we are seeing fewer bids at the $6.50 level, and in fact, we’re seeing more in the $5.75 range. That does indicate some weakness in the market,” she added.

Olson pointed out that domestic demand remains slow and steady with prices relatively stable and even weakening a bit as there’s really no urgency to buy.

“In fact, with the coronavirus fears, consumers are stocking up on some food essentials and pasta is one of those. As of now, similar to the other wheat classes, there appears to be no supply chain disruptions in the pasta industry, and in fact, at some facilities production is increasing to meet demand,” she explained.

In the latest WASDE (World Agricultural Supply and Demand Estimate) report from USDA, there were no changes for durum. U.S. durum exports are still projected at 40 million bushels (MB). If that goal is reached that would be the highest total in 10 years. U.S. domestic use is pegged at 88 MB, which also is fairly stable. Probably the biggest thing was the ending stocks number remained the same at 21 MB, which would be the lowest since 2007-08, according to Olson.

USDA has projected U.S. durum exports at 40 MB for the current marketing year. Current sales to date as of March 17 were at 30 MB.

“It’s tough to say if we’ll get another 10 MB to reach USDA’s estimate,” she said. “There are a little over two months left in the marketing year, which ends May 31. Generally we see a little bit of a pick up as spring comes and the Great Lakes ports reopen, but we saw a lot of early season demand, so it’s tough to say if we’ll see that pickup in demand in these spring months or not.”

Of the 30 MB sold, 25 million have already been shipped. The biggest customers have been Italy, Algeria, Belgium and Nigeria.

North of the border, Canada is seeing a very similar situation. Canadian durum exports through the first week in March totaled just over 100 MB, which is 40 percent higher than a year ago. Canada is also projecting a fairly big decline in stocks. It could be 50 percent lower compared to a year ago.

“The situation is that North American durum stock levels will potentially be the lowest we’ve seen in 10 years or more,” Olson said. “We really haven’t seen that influence price yet. If things start to get tight before the new crop comes off, I think there’s some potential there.”

Of course, there is a lot of speculation about how that might affect plantings for this year. In Canada there is one estimate that is projecting a 15 percent increase in acreage. The U.S. saw very low acreage last year and there are some early estimates out there that durum acres could increase by 40 percent this year.

“I think that might be a bit high, 20-30 percent might be more likely,” Olson said. “But, as with a lot of the other commodities, this is going to be closely watched, especially because of our tightening stock levels. For the U.S., we’ll get our first estimate on March 31 when USDA releases its Planting Intentions report.”