Durum prices have remained stable of late with cash bids around $6-$6.50 for top milling quality durum. However, feed grade or lower quality durum bids are in the $2-50-$3.50 range.
“We’re just coming off of the holidays, which is traditionally a slower time, so it wasn’t a surprise that we haven’t seen much improvement,” said Erica Olson, marketing specialist for the North Dakota Wheat Commission.
“Also, domestic buyers still seem fairly comfortable with the current supply levels and I would say that most of them have fairly good coverage through March. After that is when we see coverage levels slip a little, and that is the time when we could start to see buyers take additional coverage,” she added.
Also at that time producers are going to be that much closer to planting, and right now that’s “a pretty big wild card,” especially with the harvest challenges they faced last fall. Unfortunately, there are still some areas where durum is still out in the field and producers are already worried about getting remaining crops and residue out of the field and what the moisture situation will be.
On the demand side, Olson said exports continue to be strong. Even in recent weeks the U.S. has made some sales, which is somewhat unusual for this time because around the holidays is typically a slow time for the market. Currently the U.S. sits at 29 million bushels (MB) sold compared to 15 MB a year ago at this time. Most of the recent sales have primarily been to Italy. Total sales to Italy are 17 MB vs. 8 MB last year.
The U.S. has also had higher sales to Belgium and some of the traditional North African countries.
“That good sales pace is the main reason we saw big changes in the durum supply and demand numbers in USDA’s December report,” Olson said. “As mentioned in previous weeks, the U.S. is now looking at much lower durum stock levels. We could potentially drop down to 26 million bushels by the end of May 2020, which would be the lowest in five years and puts us down to a stocks-to-use ratio of 21 percent compared to 50 percent last year.
“That durum supply and demand table changes quite rapidly, so it does bear watching because we went from an abundant stock level to a potentially tight stock level,” she added.
With better export sales, the new estimate for U.S. durum sales is 35 MB. “Even a couple weeks ago I thought that was maybe too high, but now that we’re already at 29 million, so I think it’s very possible to get to that level,” she said.
Another thing affecting the supply and demand situation is the lower imports coming in from Canada. Total imports of durum and pasta to the U.S. have been at about 50 MB the last two years, but imports have been very slow this year and the current projection is 40 MB. The most recent data indicates that Canadian sales to the U.S. are only about 20 percent of what they were a year ago.
Looking at Canadian export data, they’re also seeing strong demand and sales to a lot of the same areas as the U.S., including Italy and North African countries. Their export sales are up by 60 percent.
“In terms of other news, there isn’t a lot of new information on the world front. Things are pretty stable,” Olson said. “And at this time there is no durum harvest taking place and no major weather concerns, so we’re in a wait and see period.
“I think the two main issues to watch right now is the export pace, and if it continues at the level we’ve seen, and another thing is as we get closer to March and April, what the situation starts to look like – is there potential for bigger domestic sales, and then what the weather looks like as we get closer to planting,” she concluded.