The optimism that many producers felt going into durum harvest, with a pretty good looking crop with good yield potential, has dimmed somewhat as late season rain and cool temperatures have raised quality concerns.

“Certainly there was some heightened concern with disease pressure, lower protein and hard counts due to yield potential, but since we’ve turned the corner into September and approached the middle of the month, there’s a lot of crop out there that has declined in quality,” said Jim Peterson, marketing director for the North Dakota Wheat Commission. “The degree of decline is the debate right now. It’s to the point where some of those unharvested bushels probably are going to be rolled up into bales for livestock feed or just not harvested until sometime in early October after farmers harvest lesser damaged crops off and the weather pattern changes.”

As of Sept. 16, about 50 percent of the North Dakota durum crop was harvested, according to the National Agricultural Statistics Service. In some areas in the northwest corner of North Dakota where over half the durum is produced, there was no more than 15 percent harvested.

“That would imply that in order to get to 50 percent completion most other areas in North Dakota would have to be finished with harvest,” he said. “I know in southwest North Dakota there’s still a lot of the crop left to harvest. We’ll have to see what progress shows in coming weeks. Certainly we’re well behind normal, and 50 percent seems a little strong based on producer reports.”

The reports of the crop that has been harvested, both in North Dakota and Montana, have indicated good yield.

“Certainly a significant share of the crop that had come off was generally good quality, probably a bit below average on hard counts due to wet conditions in August, and a bit lower protein than the last couple years,” he said, “and so that also contributed to some of the lower color count in the samples and hard count. That’s attributed to the crops out-yielding their nitrogen. Those areas just had better than expected yields.”

He also noted that test weights were good, and the only other issue was some pockets of DON, with some areas worse than others, even before the big, “ill-timed” rains in September.

“That has added another layer of concern, and until we get through more harvest it’s hard to tell how much more impact there could be because some of that crop was not fully mature,” Peterson said, adding that some of the reports indicated sprout showing up in the crop, and low falling numbers.

“We are starting to see some market reaction. I think the unfortunate thing is we really haven’t had a sufficient market offset to reflect the perceived quality impact,” he added.

Local cash prices are up to $5 per bushel at some locations, and only at $4.50 for others. Still, these are the highest prices since early July, so certainly the market is starting to become a little more buoyant and responsive to the harvest delays, Peterson noted.

He pointed out that in Canada some of their top end bids are equating to $5.40 U.S., and there are rumors that some are even higher.

“Whether that’s just a small volume contract being filled or a more true reflection of some tightness in the market, time will tell. Hopefully we’ll see some of that translate into the U.S. market as well,” he said.

“Other than the current crop progress, that’s going to be the big variable on producers’ minds and on the market’s mind until we get more of the crop out of the field,” he continued. “If the realistic harvest number is closer to 40 percent in both North Dakota and Montana we’ve got a pretty good chunk to go over the next few weeks.”

As of Sept. 10, Saskatchewan’s crop progress numbers showed that only 10 percent of their durum harvest was complete, which is well behind normal. Their August production number in September really had no significant change from their earlier estimate. Canada’s durum production is currently pegged at 184 million bushels which is about at the five-year average. A year ago Canada produced 211 million bushels.

“They had a significant cut in planted area, so more was going to depend on yield,” he said, adding the latest yield estimate for Canada is 38.5 bushels per acre (BPA). That compares to 34.8 a year ago.

Looking at the most recent estimates for the U.S. crop, in both North Dakota and Montana, North Dakota is at 42 BPA, up from 38 BPA a year ago – a similar rise as in Canada. Montana was only at 33 BPA, well behind the 39 BPA from a year ago.

Canada started out dry and got some good rain, similar to the U.S., with good yield potential going into harvest, but obviously there’s a lot of uncertainty on what the quality will be.

They do have some frost concerns on part of their crop due to maturity as well.

“I’ve been a little surprised as to how slow the market has been to respond,” Peterson said. “Part of that is due to the mills just having tremendous coverage for the next few months, so they’re a little immune to what could potentially be some pretty tight quality going forward.

“In addition, there’s still a large amount of good quality 2018 durum still in producers’ hands. I’m sure as prices do move up we may start to see some of that move if quality premiums are sufficient,” he added

The other issue is on the world market where we are seeing improved trade opportunities in North Africa, primarily Morocco, and also parts of Italy, according to Peterson. Some supportive factors include some quality issues in Europe where there are some lower protein pockets, some color issues and lower vitreous and they may need to import durum to upgrade protein levels.

“Unfortunately, the rains in Canada and the U.S. are going to add to that tightness worldwide of color and vitreous,” he said. “The European Union also has some pockets with some fusarium concerns that they’re dealing with. We’ll see what happens. In a month’s time we’ll know more and obviously that will give us a clearer picture of where prices can go.”

Another potential supportive factor is dry conditions in Kazakhstan. The country has been increasing its production of durum and shipping it into Europe, so they may not be as strong a competitor this year.

In USDA’s latest supply and demand report, there were no adjustments to durum. The U.S. is still looking at big supplies of 168 MB when you add June 1 stocks, production and imports out of Canada.

“A year ago we were at 164 MB, so supplies are not going to be the issue, it’s the quality of those supplies,” he said.

On the demand front, the U.S. has similar domestic use to a year ago.

Exports is a factor that likely will be adjusted going forward on a price positive perspective, Peterson noted. USDA’s sales projection is 25 million bushels, up from 22 MB a year ago. But looking at the current sales pace the U.S. has already sold, 18 MB in June, July and August, the first three months of the current marketing year, we’re way ahead of a year ago.

“That’s 90 percent ahead of a year ago. I would anticipate some slowdown in our export pace but, nonetheless, we’re on a path to do better than 25 million in exports and that’s certainly a positive,” he said.

Canada is getting close to finalizing their 2018 marketing numbers. August through July shipments in Canada stand at 165 MB, which is up 15 percent from the 2017 year. Their top three markets were Algeria, Morocco and Italy. The U.S. was their number four market, but those sales were down 15 percent compared to the previous year.

With that, Peterson said the market will be closely watching harvest progress as it wraps up and what producers may do with their crop.

“If you’re one of the producers who were fortunate enough to get your crop off before some of the weather impacts and you didn’t have DON issues to start with and had good hard count, I think the value on that durum will continue to improve,” Peterson said.

“The lower end durum is really a challenge to not only producers, but also the grain handling system, because there was a fair amount of low protein hard red winter wheat which is competing for feed demand,” he continued. “Our spring wheat crop has a lot of falling number issues in areas which is going to compete for feed demand. And then you add the durum crop in, and also barley had a lot of low quality production, so that lower end durum is probably going to struggle and I think some producers will look at crop insurance options to try and offset some of the value loss that they’re going to see in the market due to ill-timed, unprecedented rain events in September.”

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