Durum prices at highest levels of this crop year

2011-01-27T14:30:00Z Durum prices at highest levels of this crop yearBy MARK CONLON, Editor The Prairie Star
January 27, 2011 2:30 pm  • 

Local durum prices continue to roost at the highest levels of this crop year, according to Jim Peterson, marketing director for the North Dakota Wheat Commission.

"Prices are ranging from $9 to $9.40 in some locations for top milling quality durum. However, prices are still spread down to $5 on the low end," Peterson said. "Nonetheless, it's still showing a pretty strong overall market."

The current price trend is largely driven by the fact the front end of the market is starting to become well aware of the shortage of quality in the 2010 crop both in the U.S. and Canada, according to Peterson.

"If we look at current demand trend projections in the USDA Jan. 12 report, they made no adjustments to durum. Domestic use is still at 89 million bushels, which is on par with last year's 90 million bushels," he said.

Also in the report, exports were left at 45 million bushels compared to 44 million last year.

Current export numbers total 28 million bushels to date vs 33 million a year ago at this time.

"If you look at the general numbers, there hasn't been a lot of change - on paper - to say that durum numbers should have rallied $2 since November, but if you look at the bread wheats and other commodities, durum was bound to catch up."

At harvest time in September of 2010 the average U.S. durum price was $4.70 per bushel. The preliminary price for December shot up to $6.83 per bushel for all grades and qualities.

"Based on that, it's been a pretty notable uptrend," Peterson said. "The question is, will it be enough to hold acres as we go into 2011?"

One factor that shows some positive strength for prices is that USDA came out with stocks on hand as of Dec. 1 which estimated available durum stocks nationally at 68 million bushels vs. 76 million last year.

"U.S. durum production was 107 million bushels in 2010. The year before it was 109 million. To have 8 million fewer stocks when production was only down 2 million indicates the September to December period had better than expected consumption - either through feed or domestic mill demand," Peterson said.

"Those numbers are more the subtle ones you don't really see, unlike exports where numbers must be posted. But when you get more feed demand or more domestic mill demand - that's positive."

In subsequent reports Peterson said analysts feel USDA will have to make some adjustments to those numbers.

"What that will do is lower overall ending stocks," he said. "Right now usda is projecting available stocks as of June 1 will be 48 million bushels. That's up from 35 million a year ago.

"What the stocks survey showed is that we're running behind and not ahead like usda is projecting," he continued.

Durum stocks in North Dakota totaled 41 million bushels compared to 42 million as of Dec. 1 last year. Montana had 14 million vs 16 million last year.

Both states are showing fewer stocks despite higher production.

"The market had been anticipating there's a large amount of durum on farm but this survey shows less and that's positive for prices long term," Peterson noted.

The other bit of new news in the Jan. 12 report was the first estimate of 2011 U.S. desert durum plantings.

A bit of a surprise to the market was California acres were up 35 percent from a year ago - 155,00 vs 115,000. Arizona had no change in acres, so the total desert durum crop as of January showed 235,000 acres planted.

That puts the area on pace for a 22-23 million bushel durum crop which is up from 20.7 million harvested in 2010.

Peterson said that current contract prices in that region are about $8.50 to the grower and expectations are that will move higher as prices in the north move higher or Canadian prices move higher.

Also, added interest in the desert durum is coming from domestic mills who are more aware that quality in the northern U.S. and Canada is getting tighter and they want to lock in a source for the summer months.

One factor that will limit a further increase in desert durum acreage is that cotton prices are very strong in that area.

"But for now the durum market looks to have some pretty good short term support under it, driven by the need for durum in the domestic market, and durum needing to stay on pace with spring wheat," Peterson said. "If those factors continue, durum should continue to have good support under it, at least until we get into April and May and more is known about the 2011 European Union crop and planting prospects for the U.S. and Canada become more certain."

Copyright 2014 The Prairie Star. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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