With durum harvest delayed this fall due to wet conditions and concerns over quality, prices for top-end milling quality durum have rallied, but have recently slipped back slightly.
“With durum we’ve seen the market slip back a bit on top-end milling durum as we hit the end of October,” said Jim Peterson, marketing director for the North Dakota Wheat Commission. “Part of it is sellers who were short contracts who were likely able to get some coverage with the run-up in prices in early to mid-October. There’s probably not a whole lot of new contracts being written until there’s a more final assessment of both the U.S. and Canadian crops.”
The latest crop progress report still indicated close to 15-20 percent of the crop in parts of the region remained to be harvested. Obviously, Peterson noted, the impression is that a lot of that will be feed quality, but some millers are expecting some of it to be milling quality.
“I guess we’ll see what happens, but I highly doubt that with the weather we’ve had,” he said.
Current price levels are $6.25-$6.75 with the average around $6.60.
Prices had been approaching $7 earlier in a few locations, so they’ve fallen back about 40 cents a bushel in some markets. Looking at the run-up in values since harvest, the National Durum Index is at $6.20, which is up about $1.60 since harvest and still a pretty significant run-up.
“With durum there’s a whole range of pricing scales. The top-end is $6.50, mid-quality may be as low as $4-$4.50 and lower-end durum – close to feed quality – is $2.50-$3,” he said. “That’s quite a range. We’ll see what happens going forward. If we continue to see upward pressure on the top milling quality because vitreous kernels are pretty important for semolina production, maintaining color in pasta, and falling numbers are pretty important for maintaining cooking properties. There’s probably only so much leeway mills are willing to work with and still produce a valuable end product.”
Peterson anticipates that throughout the marketing year there will be some periods where there are going to be some shortages and higher prices for some of the higher-end durum.
In terms of trade, the U.S. has had a very good start to durum export sales. From June through mid-October, the U.S. had already sold 19 million bushels, which is up more than 50 percent from a year ago at this time.
Over half of that has been to Italy, which is running twice the level they were a year ago. Algeria, Belgium and Nigeria are also in the market, so the U.S. has seen generally pretty good demand in key markets.
In contrast to hard red spring wheat, durum sales on the books, or yet to be shipped, are also double what they were a year ago.
Part of what’s driving that is Europe had a smaller durum crop, including Italy, which has some quality issues. As a result there has been “some pretty good demand” in Europe for quality. Part of that durum is being sourced from France, but the rest has to come from either the U.S. or Canada.
Another positive factor, Peterson noted, is that Kazakhstan ran into some drought conditions so their crop is a bit smaller.
North of the border, Canadian sales to date are doing very well. Their sales year is only two months old, from August through September, yet they’ve already shipped out 30 million bushels, which puts them up 55 percent from a year ago. Similar to the U.S., Canada is seeing very strong demand from Italy where they’ve already sold about 6 MB, which is about three times what it was a year ago. Canada has also made strong sales to Morocco.
The other somewhat surprising market for Canada is Turkey, which is Canada’s largest importer. Turkey ran into some quality issues as well with their production so they needed to import.
“The debate going forward is at what point do top-end quality durum supplies become acutely tight? There is some 2018 carryover to work with, but I think it’s going to take higher prices than where we are currently to move that from producers’ hands,” Peterson said.
“Nonetheless, we still have a very strongly supported durum market. It has maybe eased back a bit, but obviously still a lot of positive fundamental factors for continued support going forward.”