Now that durum planting will have been completely finished by the time of this report, the durum market is turning its attention to weather, growing conditions and crop progress as it looks for direction. In the meantime, durum prices continue to hover near that $5 figure.
The market has seen cash bids at some locations come up in early June, some around the $5 mark. The price range is still about $4.70-$5, and those $5 bids are mostly for old crop durum. New crop durum prices are still hovering at that $4.75 level.
“Those $5 bids likely represent some near-term need that needs to be filled and not actual market concerns, but either way, any increase is good,” said Erica Olson, marketing specialist for the North Dakota Wheat Commission.
Olson pointed out that durum planting is basically finished with 93 percent of planting complete, though there still might be a few producers trying to get some acres in (as of June 11). Development of the crop is still a little behind average and emergence of the crop is at 77 percent, just slightly behind the average of 80 percent, “so not terrible.”
About 86 percent of this year’s durum crop is rated in good-to-excellent condition. However, some of those durum areas are a bit dry and will need to see some precipitation soon, according to Olson.
“We will get updated planted acreage numbers at the end of the month. But it’s questionable how accurate those will be because the survey was done at the beginning of June when planting was still going on,” she said.
Looking at the desert durum area in Arizona and California, durum harvest is a bit ahead of schedule with about 43 percent of the crop already harvested in Arizona. That compares to 32 percent over the five-year average. Thus far there have not been any issues there regarding harvest.
In Canada, for the most part, producers were finished seeding about a week ago, according to Olson.
“They didn’t have the delays that we did here in North Dakota and Montana, however it is becoming very dry in Canada’s durum growing region and that’s worth watching,” she said. “The soil moisture condition in a lot of the durum growing area in Canada is rated short-to-very short and that does show in their crop ratings. For example, in Saskatchewan only about a third of the crop is rated in good-to-excellent condition.”
Looking at other durum producing areas around the world, the International Grains Council (IGC) recently provided some updates. According to the IGC, production in Algeria is expected to be a bit better than expected. It’s still going to be lower than last year by about 3 percent, but earlier projections called for a decline of 28 percent.
However, in Morocco, production is estimated to be about 50 percent lower.
Durum production is forecast to decline in Europe, Canada and the U.S., according to the IGC. The only exception is Mexico. Production there is expected to be higher this year, but that’s mainly because they had a poor production year in 2018.
“Basically they’re looking at an average crop in 2019,” Olson said.
Durum ending stocks are projected at a 5-year low. Production is projected lower in all of the major durum producing regions except Mexico, which could have an effect on supply levels.
“This will be important to watch because, obviously, looking at the information out there, there is a lot of production uncertainty, but we’re expecting demand to remain strong,” she said.
Looking at the U.S. export situation, the marketing year ended May 31, but there will still be time before the final export numbers are released. Olson noted that through the last weekly reports that U.S. durum sales were at 18.5 million bushels, which would be just short of USDA’s estimate of 20 million bushels.
“So we’ll have to see where those final numbers land, but we are expecting to be higher than a year ago when we were at 15 million bushels,” Olson said.
The biggest increases in U.S. durum sales were to Italy, Nigeria and Peru
“From the demand side of things, sales are still a bit slow, but as I mentioned, I think now it will be very important to watch how the 2019 crop progresses, especially with some of these concerns about drought, dry conditions and production declines,” she said. “So there could be some hope.”