Cash prices for durum remained unchanged at $5.75-$6.25 following the final acreage report from the U.S. Department of Agriculture on June 30. Now the market is keeping a close watch on the weather and crop development.
“Everyone was fairly interested to see that (updated USDA acreage) report just because the March (planting intentions) report wasn't considered overly accurate because it was before planting had started and there was still a lot of indecision at that time,” said Erica Olson, marketing specialist for the North Dakota Wheat Commission.
The report showed that U.S. planted durum acres is now estimated at 1.5 million acres, which is up about 200,000 from March. That’s also up from last year’s 1.34 million acres.
“In fact, the 1.5 million number was a bit higher than what a lot of the pre-report trade estimates showed,” she said.
Looking at the North Dakota numbers, Olson said they were within expectations.
“USDA has North Dakota durum acres at 790,000, which is 150,000 higher than the March estimate and compares to 720,000 last year, so higher but still well below the 5-year average of 1.1 million,” she said. “We were hearing of increased interest in durum as producers got in to planting and that is what the report shows, however, our acreage is still well below previous years’ levels.”
The Canadian acreage report also came out and showed higher than expected acreage. The new numbers from Canada show that 5.7 million acres of durum got planted this year, up half a million acres from their April estimate. That compares to 4.9 million acres last year.
“Really, those reports weren’t exactly price positive for durum,” she said. “I think they alleviated some concerns over the expected tight durum supplies, but at the same time, if you look at some of the average numbers, our situation is still going to be tighter than normal.”
Looking at this year’s durum crop, one thing to consider is that condition ratings have continued to decline. Last week, only 48 percent of the durum in North Dakota was rated in good-to-excellent condition, which did go up this week to 66 percent, but three weeks before over 80 percent of the crop was rated good-to-excellent.
“The reason is that it has been dry, basically from before planting and through most of the growing season,” she said. “And then we’ve had the warmer temperatures and the wind that have further dried out the topsoil. So we’ve definitely seen those effects on the crop.”
Over the last week in June and first part of July, a lot of durum producers did get some precipitation, on average around an inch, but of course, some got less, some more.
“For some of that earlier planted crop, the rain came too late. We’ll continue to need more precipitation in the weeks ahead,” Olson said. “So we probably did lose some of that top yield potential for sure. We’ll continue to watch that.”
Also of interest, USDA was expected to release its first supply and demand estimate for durum for the 2020-21 crop year on July 10. In previous reports, USDA has provided some interesting, if not confusing numbers.
“In its latest estimates for this past crop year, USDA had put ending stocks all the way down at 19 million bushels (MB) for the marketing year ending May 31, which obviously is a very tight situation,” Olson said. “But then when we got the June 1 stocks report, it showed stocks at 43 MB. That’s a pretty big difference. We already know that the export estimate was about 10 MB too high, so that’s part of it. But then the next question is, where are they going to make those additional adjustments in the supply and demand numbers?
“The durum numbers are a head scratcher for sure,” she continued. “If we take that stocks number of 43 MB, that actually shows a pretty comfortable stocks level, although still below a year ago. That would indicate that disappearance March through May would be only 9 MB, which is down over 50 percent from a year ago.
“We know that consumption of boxed pasta for at home was up, but obviously the food service consumption was down. That number is quite low,” she added.
On the other hand, the latest numbers from the International Grains Council indicate they are still forecasting world durum stocks to be at a 13-year low by the end of the 2020-21 year.
Those stocks have been tightening, Olson noted, and look to continue given the lower production in North Africa this year.
“Even if U.S. stocks come in higher, the world situation is still going to be tighter than normal,” she said.
On the demand side, Olson pointed out that durum sales through the end of June were just over 11 MB, which is about 3 MB higher than last year at this time.
“That’s a pretty good sign, given that we had pretty big sales this past year,” Olson said, adding that the bulk of them, not surprisingly, were to Italy. There are also still some sales coming as destinations unknown at this time.
“So we’re seeing good export demand, and domestic demand has been pretty much stable – nothing too exciting there,” she concluded.