Durum

As it has for the past several weeks, the durum market has remained stable, seemingly unfazed by the coronavirus, which has impacted many other commodities.

“The coronavirus hasn’t really impacted the durum market like it has other commodity markets because there is no durum futures market,” said Erica Olson, marketing specialist for the North Dakota Wheat Commission. “The spillover from all that concern really hasn’t affected the durum market. However, it could potentially if the virus continues to spread and cause customers to scale back purchases.”

As of March 3, cash bids for milling grade durum were relatively stable with $6.50 being the highest bid and some bids closer to $6. There are also a lot of $6.15-$6.25 bids out there, as well.

As has been mentioned in previous reports, this does tend to be a slow time of year for durum, so it’s not surprising that there hasn’t been any price movement, according to Olson.

On the demand side, export sales for the month of January were very slow.

“Again, that’s not surprising with the Great Lakes ports closed. But the first half of February did see some sales at least, primarily to Italy and Nigeria,” she said.

To date, total U.S. durum sales now stand at 30.4 million bushels (MB), well above last year’s total of 14 MB at this time. The good news is the bulk of it – 25 million – has already been shipped.

“We still do still have a ways to go to reach USDA’s 40 million bushel target,” Olson said. “If we get there it really depends on whether we see this demand pace remain steady, and I also think it’s going to depend on what type of quality our customers are looking for.”

Italy remains the largest buyer of U.S. durum by far, accounting for about two-thirds of total sales. Making up the remainder is Algeria, Belgium, Nigeria, Tunisia and Libya.

Domestically, Olson pointed out, there really is no urgency in the market right now.

“Prices are stable, so pasta manufacturers have just been slowly adding to their coverage but not making any major increase in purchases right now,” she said. “I think, though, there is quite a bit of anticipation over acreage this spring. Many, including us, assume that acreage will increase compared to last year when acres were very low.

Olson also noted that the price spread over spring wheat has increased. At this time, durum has a premium of $1.20-$1.50, depending on the area.

At the USDA Ag Outlook Forum, the agency is expecting durum acreage to be up from 2019, but remain below the five-year average.

“They don’t give specific numbers by class, so that is a bit vague,” she said. “They are calling for an increase, but not substantial. We have seen some private estimates that are using a 40 percent increase, which is pretty high.

“I think there are a few things that are going to limit the acreage gain,” she continued. “Obviously, we had major problems getting the crop harvested last year, and then there were quality issues which, of course, sticks with producers. And then the big unknown is the spring. Things have been pretty wet.

“Honestly, right now it’s really tough to peg any sort of estimate for any commodity. At the end of the month, March 31, we will get the planting intentions report. I still think things will change quite a bit, even from that report,” she added.

Because of the smaller production last year and the continued strong export demand, stocks are starting to decrease. In the U.S., stocks could be down potentially by 60 percent at the end of the marketing year, which would be the lowest in 10 years.

Canada is in a similar situation. They’re forecasting their stocks could potentially drop by 50 percent down to 31 MB. The biggest declines are in North America, but looking at total world durum stocks they are projected to hit a five-year low and be down about 25 percent in one year.

“We’re definitely looking at a tighter situation and I think that will be interesting to see how that plays out in the next few months, especially price-wise,” she said.

The International Grains Council (IGC) recently provided some updated world durum numbers. There were a few changes for durum, including lower production numbers for Mexico, dropping about 10 MB down to 62 MB. The IGC lowered Australian durum production, as well.

On the other hand, import demand is stronger than it has been in recent years, in particular for Europe. Europe’s total imports are projected to be 50 percent higher this year. For Turkey, their imports are projected to double compared to a year ago.

“That strong demand combined with the five-year production low is obviously what’s contributing to those lower ending stocks,” Olson said. “I think the tighter stocks, that’s what makes the planting season probably even more interesting for the market, so that will be what’s on everyone's mind for the next couple months.”

Durum prices remain stable as spring approaches

By MARK CONLON

For Farm & Ranch Guide

As it has for the past several weeks, the durum market has remained stable, seemingly unfazed by the coronavirus, which has impacted many other commodities.

“The coronavirus hasn’t really impacted the durum market like it has other commodity markets because there is no durum futures market,” said Erica Olson, marketing specialist for the North Dakota Wheat Commission. “The spillover from all that concern really hasn’t affected the durum market. However, it could potentially if the virus continues to spread and cause customers to scale back purchases.”

As of March 3, cash bids for milling grade durum were relatively stable with $6.50 being the highest bid and some bids closer to $6. There are also a lot of $6.15-$6.25 bids out there, as well.

As has been mentioned in previous reports, this does tend to be a slow time of year for durum, so it’s not surprising that there hasn’t been any price movement, according to Olson.

On the demand side, export sales for the month of January were very slow.

“Again, that’s not surprising with the Great Lakes ports closed. But the first half of February did see some sales at least, primarily to Italy and Nigeria,” she said.

To date, total U.S. durum sales now stand at 30.4 million bushels (MB), well above last year’s total of 14 MB at this time. The good news is the bulk of it – 25 million – has already been shipped.

“We still do still have a ways to go to reach USDA’s 40 million bushel target,” Olson said. “If we get there it really depends on whether we see this demand pace remain steady, and I also think it’s going to depend on what type of quality our customers are looking for.”

Italy remains the largest buyer of U.S. durum by far, accounting for about two-thirds of total sales. Making up the remainder is Algeria, Belgium, Nigeria, Tunisia and Libya.

Domestically, Olson pointed out, there really is no urgency in the market right now.

“Prices are stable, so pasta manufacturers have just been slowly adding to their coverage but not making any major increase in purchases right now,” she said. “I think, though, there is quite a bit of anticipation over acreage this spring. Many, including us, assume that acreage will increase compared to last year when acres were very low.

Olson also noted that the price spread over spring wheat has increased. At this time, durum has a premium of $1.20-$1.50, depending on the area.

At the USDA Ag Outlook Forum, the agency is expecting durum acreage to be up from 2019, but remain below the five-year average.

“They don’t give specific numbers by class, so that is a bit vague,” she said. “They are calling for an increase, but not substantial. We have seen some private estimates that are using a 40 percent increase, which is pretty high.

“I think there are a few things that are going to limit the acreage gain,” she continued. “Obviously, we had major problems getting the crop harvested last year, and then there were quality issues which, of course, sticks with producers. And then the big unknown is the spring. Things have been pretty wet.

“Honestly, right now it’s really tough to peg any sort of estimate for any commodity. At the end of the month, March 31, we will get the planting intentions report. I still think things will change quite a bit, even from that report,” she added.

Because of the smaller production last year and the continued strong export demand, stocks are starting to decrease. In the U.S., stocks could be down potentially by 60 percent at the end of the marketing year, which would be the lowest in 10 years.

Canada is in a similar situation. They’re forecasting their stocks could potentially drop by 50 percent down to 31 MB. The biggest declines are in North America, but looking at total world durum stocks they are projected to hit a five-year low and be down about 25 percent in one year.

“We’re definitely looking at a tighter situation and I think that will be interesting to see how that plays out in the next few months, especially price-wise,” she said.

The International Grains Council (IGC) recently provided some updated world durum numbers. There were a few changes for durum, including lower production numbers for Mexico, dropping about 10 MB down to 62 MB. The IGC lowered Australian durum production, as well.

On the other hand, import demand is stronger than it has been in recent years, in particular for Europe. Europe’s total imports are projected to be 50 percent higher this year. For Turkey, their imports are projected to double compared to a year ago.

“That strong demand combined with the five-year production low is obviously what’s contributing to those lower ending stocks,” Olson said. “I think the tighter stocks, that’s what makes the planting season probably even more interesting for the market, so that will be what’s on everyone's mind for the next couple months.”