Cash prices for milling quality durum have barely moved over the last few months and remain in that $4.50-$4.80 range, although in some locations some bids are a little closer to $5.
“Basically, prices are stuck in the same old rut as they’ve been the past few months,” said Erica Olson, marketing specialist with the North Dakota Wheat Commission. “That’s just because of slow demand, adequate supplies and no new news.
“When we look at demand, for the U.S. it looks promising because our durum exports are up 54 percent compared to last year, which is great,” she continued. “However, if you look at the numbers, we’ve sold 15.4 million bushels which, historically speaking, is not that high and is still only about halfway to USDA’s estimate of 30 million bushels.”
Olson pointed out the U.S. is seeing higher demand from some of its top buyers, including Italy, Nigeria and Algeria, but there definitely will need to be more if there is to be any kind of price response.
To the north, Canadian exports are actually lower than a year ago and are down about 18 percent. Canadian durum sales are down to Italy and Algeria, but are higher to Morocco and the U.S.
“The big issue this year is that world supplies are seen as adequate,” Olson said. “World ending stocks are expected to increase by 6 percent. We had good production in most of the major producing regions and trade is expected to be at a 6-year low. That’s primarily due to decreased demand in North Africa and Europe.
“We have a smaller pool of export markets anyway for durum and when we have better production in some of those areas it takes away a lot of market potential,” she added.
USDA is back releasing various reports following the reopening of the government. Looking at some of those USDA reports there were no changes in the World Agricultural Supply and Demand Estimates for durum. Domestic use was still pegged at 88 million bushels, exports at 30 million bushels and ending stocks were at 45 million bushels.
The stocks report showed that as of Dec. 1, the U.S. had 84 million bushels of durum stocks. That’s up almost 50 percent from a year ago.
“Breaking that down a bit the September through November disappearance was only 6.5 million bushels, which is down 36 percent,” Olson said. “So even though our exports are up, our overall domestic demand is down and some of that is due to Canadian durum coming into the U.S.
“If we don’t start to see disappearance pick up after the next two quarters our ending stocks could end up being higher than 45 million bushels,” she said. “So, at this time there is no supply issue.”
One of the next issues the market will be looking at for direction is the acreage outlook for 2019. At this time basically all signs point to a decline in durum acres this year. Ag Canada is projecting Canadian acres to fall from 6.2 million acres to 4.6 million. In the U.S. Southwest desert durum region, seeding took place on 88,000 acres. That’s down 20 percent on the year and probably one of the lowest acreages in recent history.
In the northern durum region of North Dakota and Montana, the expectation is for a decline but by how much is the question.
“We declined 300,000 acres last year, down to 2 million, so we could possibly see another 200,000-300,000 acre decrease,” Olson said. “Back in 2011 we dropped way down to 1.2 million acres, but that was due to a wet planting year.
“Even if we do start to see those acreage declines, I’m not even sure if that would be enough to get the market moving. It really depends on what happens in the rest of the world and how many stocks we can eat through,” she concluded.