Over the last two weeks of July and into August, durum prices have remained relatively flat as harvest was just around the corner.
As of Aug. 5, most cash bids were in that $4.70-$4.80 range, which is basically the same as it was a couple weeks before that, according to Erica Olson, marketing specialist for the North Dakota Wheat Commission.
Olson pointed out that harvest really hadn’t begun in the northern durum area of the U.S., in North Dakota and Montana, as the crop was a little behind in development. The latest USDA crop progress report indicates that in North Dakota about half of the durum crop had started to turn color which is behind the average of 65 percent and well behind last year at this time when about 85 percent of the crop had turned.
“The crop has been a little bit slow,” Olson said.
“Condition ratings, too, as we have progressed through the growing season, have actually dropped off,” she continued. “Right now we’re still fairly high with about 69 percent of the durum crop in North Dakota is rated in good-to-excellent condition, however, last year it was rated over 80 percent (good-to-excellent).”
According to Olson, producers have indicated that the dryness at planting time, which continued through the growing season, has affected the crop and potential yield.
“I think that’s why we’re seeing those crop condition ratings a bit lower,” she said.
The Wheat Quality Council (WQC) tour took place in late July and although the tour typically doesn’t typically stop to inspect a lot of durum fields, the ones where the tour did stop did show lower yield potential than a year ago. The average yield of the fields looked at was 32 bushels per acre. That compares to 39 bushels per acre last year.
“That’s not overly surprising based on what we’ve heard,” Olson said. “USDA’s estimate is the same as last year at 39 bushels per acre, so we’ll see where that comes out.
“It will be interesting to watch because we’re already expecting much lower production this year, so obviously, any additional yield loss will continue to bring that number down,” she added.
Looking west to Montana, their durum crop progress is closer to average with 58 percent having turned color compared to 65 percent on average. Olson noted it’s probably going to be mid-August before producers get much into harvest and the market starts hearing reports on yield and quality.
“I think the question is the market hasn’t reacted to any of the estimates for lower production, lower planted acreage,” he said. “So we’re wondering, ‘Okay, if harvest starts and we are seeing lower yields, will that finally get the market going?’ At this point, who knows?”
Looking north to Canada, in general their crop report indicates most of their crop is a week or two behind in development. The durum crop in Saskatchewan is rated about 60 percent good-to-excellent, which is fairly normal. But in Alberta, the crop is rated a bit lower than normal with just 37 percent in good-to-excellent condition, according to Olson.
“That’s probably not indicating strong yield potential. Also, Alberta has also been struggling lately with overly wet conditions in areas,” she said.
On the demand side, looking at the U.S. durum export pace, the U.S. has sold just over 13 million bushels so far in the marketing year. That compares to only 6 million bushels a year ago at this time, so that’s more than double. The U.S. has been seeing big increases to Italy, where sales are actually about five times higher than a year ago, and also higher to Algeria.
“Obviously, this is all great, but I think the bigger question is ‘will this demand continue or are we just seeing some early season buying?’ With the stocks that we’ve built up over the past couple of years, we’re going to need to see some good demand to help out prices,” she concluded.