Durum

With much of the country sheltering-in-place, consumer demand for food staples, pasta being one of them, is up and creating a short-term spike in demand. As of March 31, most cash bids around the region were steady at around $6.

However, in the food service areas like restaurants and schools, which have been shut down, demand is obviously lower there.

“We have increased demand in one area and decreased demand in another. It’s tough to say what the end result will be,” said Erica Olson, marketing specialist with the North Dakota Wheat Commission. “Overall demand could end up stable, but if the coronavirus situation continues, we could see a small continued increase in demand as consumers continue to stay at home and rely on non-perishable foods.

“We are seeing pasta manufacturers ramping up production,” she continued. “However, at this time, the manufacturers seem comfortable with durum supplies, so they’re not actually increasing their durum purchases. That’s one of the reasons prices are stable.”

USDA released its Prospective Planting report on March 31, which had a surprise for durum. USDA showed U.S. durum acres as potentially dropping 4 percent, down to 1.29 million acres. “A lot of people were actually expecting an increase, anywhere from 15-30 percent, so that was a bit surprising,” she said. “Acres last year had taken a pretty big hit already and were down about 17 percent from the previous year, so we didn’t think they could go a lot lower. If they do go down to that 1.29 million acres that would be the lowest acreage in 60 years.”

Of course, Olson noted, the March numbers are very preliminary as the survey was done in early-March. And they always change as producers get further into the planting season.

“But the report is an indication of what producers are thinking right now, and producers are indicating they don’t have a lot of inclination to plant additional durum acres,” she said.

By state, durum acres are projected down 80,000 in North Dakota to 640,000. Montana is actually expecting an increase of 20,000 to 570,000. The desert durum area was already projected about 15 percent higher in the January report.

“I think it will be interesting to see what prices do, if they react to that report or not,” Olson said. “Of course, it’s going to be dependent on what the Canadian numbers show. They’re projecting an increase, but their numbers don’t come out for a few more weeks. However, if those numbers show a decline, I think prices should react to that.”

In terms of getting the 2020 crop planted, there are some areas in the region that are still wet, and some still have last year’s crop standing, so there are still challenges for producers in that regard.

Also, out on March 31 was USDA’s March 11 stocks report. Not surprisingly, U.S. durum stocks are down about 30 percent from a year ago at 51.5 million bushels (MB), Olson noted.

“Again, that’s not surprising given our lower supplies last year and then the strong demand that we’ve been seeing this year,” she said.

Disappearance for the first three months of the calendar year was 13 MB, which is an increase of about 40 percent.

On the demand side, the U.S. recorded pretty good sales the last full week in March with over 3 MB sold. A big chunk of that, about 2.2 MB, is listed so the destination of those purchases is not known. About 770,000 bushels went to Algeria.

Currently total durum sales stand at 33.5 MB, which is double U.S. durum sales of a year ago at this time.

“So far, it appears that the supply chain is running smoothly at this time, both domestically and exports,” Olson said. “Of course, it really depends on workers in the pasta plants, the truck drivers, etc., making sure there’s enough of them and keeping them healthy. And then also at the ports. So far, the U.S. ports are still open, they’re still doing inspections, but it’s important to keep our eye on those types of things.”

The International Grains Council (IGC) recently updated some of its numbers. The IGC is looking at world durum production next year to increase by 5 percent, but that’s highly dependent on recoveries in the U.S., Canada and Europe.

“I think that after seeing today’s numbers for the U.S., that’s a bit questionable,” Olson said.

In North Africa, conditions are a bit dry there, so they’re projecting lower production for that region and thus increased imports for that region.

“At the end of the day, world durum stocks are expected to continue to tighten into 2020-21,” she concluded.