Durum prices were ranging around $4.50-$4.75 following the Labor Day holiday, so stable, but not overly attractive to producers as harvest progresses.
“Durum prices are holding in better than spring wheat prices at this point,” according to Erica Olson, marketing specialist for the North Dakota Wheat Commission.
The big thing taking place right now is the ongoing harvest, which lags behind average as rain events in late August and over the Labor Day weekend have delayed some of the progress. There have not been a lot of yield reports as yet, but for the most part, early reports have indicated good yields so far.
“But with some of the weather conditions there are some concerns out there in terms of what could happen with quality, specifically color, falling numbers, those types of things,” she said. “Of course that’s all still to be determined, and hopefully there won’t be any major issues.”
Looking at harvest progress in the region, North Dakota durum producers were 34 percent complete, which is well behind last year’s pace of 72 percent and the average of 56 percent.
Montana durum harvest has been even slower with very little progress over the last week.
About 26 percent has been harvested, compared to an average of 60 percent.
“This harvest will be watched closely, especially because we are expecting about a 26 percent drop in U.S. durum production versus last year, so that’s only 57 million bushels of production,” Olson said.
“Canada is kind of in the same boat with their harvest just getting under way,” she continued. “They have the same issues with a later crop and also struggling with some wet conditions.”
Olson noted they didn’t have any updated harvest reports as of the start of September, but as of the last week in August, harvest progress was still in the single digits and moving fairly slowly.
Stats Canada recently came out with it first production estimate which was lower than expected. The agency has Canadian durum production at 162 million bushels which is about 20 million lower than initial estimates.
The decreased production is attributed to lower acreage this year, but they’re also forecasting lower yields than first expected. If this plays out, this would put Canadian durum production down 23 percent on the year and the lowest in 8 years.
“The interesting thing though in the August International Grains Council (IGC) report is they actually raised their estimate for Canadian production,” Olson said. “They have their estimate at 191 million bushels, which is about 30 million higher than Stats Canada. It will be interesting to see how that actually plays out.”
Olson pointed out the durum number in the IGC report was the only production change. The IGC noted that durum production in northern Africa was above average in Algeria and Tunisia, as expected, but in Morocco production was down by about half due to dry conditions there.
The IGC is still expecting world durum demand to be stronger this year and that will potentially lead to lower ending stocks.
“Theoretically that should be good for prices,” she said.
On the demand side, the U.S. is seeing some fairly good export demand with sales about double last year’s pace at 16 million bushels sold so far. Nearly half of those sales have been to Italy. As of Sept. 3, the U.S. had sales of 7 million bushels to Italy and that compares to less than 1 million bushels at this time a year ago.
Sales to Algeria are also slightly higher as well at 2 million bushels. A lot of the remaining sales are to unknown destinations at this time.
Looking at Canadian demand, their new marketing year just started on Aug. 1, but they are also seeing higher export demand for durum. Canada has 9 million bushels in sales compared to 5 million a year ago at this time.
“If that early season demand from both the U.S. and Canada is any indication that does point to stronger world demand just like the IGC report indicated,” Olson said. “But I think the key thing is going to be if we continue to see that demand.”
Looking at domestic demand, Olson pointed out that hasn’t been as promising and has been fairly slow so far.
“Most mills and pasta manufacturers have fairly good coverage through the end of the calendar year so there’s not a lot of concern there,” she said. “But again, I think the key factor is going to be the harvest progress in the U.S. and Canada and, probably more importantly, watching for any quality issues.”