Durum

For the past several weeks it’s been the same old story for the durum market with prices remaining stable.

Cash prices have remained steady through June with most bids in the region coming between $5.90-$6.25, with a price of $6 being the most common.

Durum planting in North Dakota and Montana is complete and now the market and producers are waiting for the June 30 USDA report to find out what the final planted durum acreage number will be, according to Erica Olson, marketing specialist for the North Dakota Wheat Commission.

“Back in the March planting intentions report, USDA was projecting an 11 percent decline in acres from the previous year (in North Dakota), but most analysts feel that the number of acres will be higher in the upcoming report,” Olson said.

As of June 22, when Olson gave her report, most of the durum crop in the region had emerged. According to the most recent USDA crop progress report, the condition of this year’s crop has dropped considerably from the past couple reports. As of June 22, about 51 percent of the crop is rated in good-to-excellent condition. That compares to 73 percent the prior week and 82 percent good-to-excellent from two weeks ago.

“The drop in condition rating is likely due to dry conditions out west,” she said. “Those conditions are starting to stress the crop a little bit. It’s definitely not a disaster by any means, but it is affecting stands and yield potential.”

The western half of North Dakota and into eastern Montana is still classified as “abnormally dry,” and some of that is classified as a “moderate drought,” according to the latest U.S. Drought Monitor.

“We did see some moderate precipitation last week, but in most of the durum areas they only got a trace – some places up to half an inch – but very, very spotty and not necessarily very beneficial for anyone.

“Looking at precipitation trends, most of those durum areas in the last six weeks have only had 30-70 percent of normal precipitation, so that bears watching,” she added.

In Canada, durum growers have also completed durum planting. In Saskatchewan, 77 percent of this year’s durum crop is rated in good-to-excellent condition, but producers there are also reporting there are a lot of areas that could use some rain. In Alberta, Canada’s other main durum growing province, things are looking better with 85 percent of the crop in good-to-excellent condition. Alberta is also showing a much better moisture situation, so things aren’t as concerning there, Olson noted.

“Crops in both countries will be watched closely,” she said. “We are expecting world durum supplies to continue to tighten and demand may be higher, especially from North Africa.”

The marketing year for wheat ended May 31, and according to USDA’s final export numbers, U.S. durum export sales totaled 35.5 million bushels (MB). That compares to 18.5 MB a year ago. However, not all of that 35.5 MB was able to get shipped prior to May 31. So for the year, the total sold and shipped came to 34 MB, which was “still pretty good” and about 60 percent higher than last year.

Of those sales, two-thirds went to Italy, which was more than double the sales there a year ago. Other big buyers included Algeria with 4 MB, which was a slight decline from 2019, and Belgium with 1.5 MB in sales, which was up from last year. The U.S. also had sales of just over 1 MB to Tunisia for the first time in a few years.

The new marketing year, which started June 1, is just weeks old, but the U.S. is still continuing to see strong demand for durum.

“Some of that, of course, is due to the fact we had carryover sales from the previous marketing year,” Olson said. “But either way, our sales for the new marketing year are at 10.5 MB versus about 8 MB a year ago,” she said. “And once again, it’s Italy leading the demand. We’ll see if and how that continues through the summer.”

Although final U.S. durum export sales came in at 34 MB, oddly enough, in the June WASDE report (World Agricultural Supply and Demand Estimate) USDA actually raised its durum export estimate for the U.S. from 40 MB to 42 MB. As a result, ending stocks went from 21 MB down to 19 MB.

“Our export number shows 34 MB so that 42 (MB) number is probably going to be adjusted,” Olson said. “Right now, we take those numbers with a grain of salt. Sometimes they use the domestic use number and the export number to help balance the supply and demand numbers, so I think we’re going to see those revised.

“The stocks number USDA is projecting is 19 MB, but U.S. durum stocks as of March 1 were 51 MB. So if we reach that 19 MB, we would have a disappearance of 32 MB, which would be very, very high,” she added.

USDA will issue a June 1 stocks report at the end of June, as well. Olson is anticipating that in July USDA will update that supply and demand number again. That’s also when the market will get its first look at the 2020-21 supply and demand numbers.

In regard to domestic demand, the industry is starting to see grocery store purchases of pasta start to slow a little from the surge in March and April due to the shelter-at-home policy across the country due to the coronavirus. Still that demand remains stronger than normal.

“However, at this time most domestic buyers seem to be quite patient, not picking up a lot of new purchases for durum supplies,” Olson said. “I think right now, like all of us, they’re just watching the crop progression, both here in the U.S. and in Canada, just to see how those acre numbers play out and then how the weather may or may not affect the crop. So things are still pretty slow on the domestic side.”