As producers continue to play catch-up in terms of getting this year’s durum crop in the ground, the durum market remains stable, which is actually good news.
“The durum market has been holding pretty stable for the most part. In some respects, that's a positive considering some of the volatility we’ve seen in some of the other markets.” said Jim Peterson, market director for the North Dakota Wheat Commission, adding that a stable market indicates there’s not a lot of trading either way from buyers or sellers to move the market. “It indicates a pretty thin market until something more dramatic changes the price direction.”
Peterson noted that during this prolonged planting season for durum, there’s obviously some frustration among producers that there isn’t a little more concern about planting delays across parts of North Dakota and the Northern Plains.
“In the same token, there are other areas where they’ve been able to get the crop in timely, and with the moisture we’ve got, the crop seems to be off to a pretty good start,” he said. “I think right now the market is not as concerned about delays in planting. We’ll see in a couple weeks, if we’re not able to make a lot of catch-up progress, then there might be more concern about a potential loss of acres, at least in North Dakota.”
But there are some bigger issues that, at this time, help underpin the market to prevent even further price drops, including some pretty severe drought conditions in Morocco and Tunisia. This could potentially put some further strength in the market, according to Peterson.
In that region of North Africa, April was pretty much void of moisture with warmer than normal temperatures. As a result, in the most recent production estimates from the International Grains Council (IGC), the IGC slashed the outlook for durum in both Morocco and Tunisia. For Morocco, the IGC had been estimating production closer to 50 million bushels (MB), but is now looking at a crop that’s only 44 MB.
“A year ago they were down to about 30 million bushels, so it is better than a year ago, but compared to earlier expectations, there’s concern,” he said.
In Tunisia, the early estimate was about 36 MB, and now the IGC has it down to 18 MB.
“In the scope of things, compared to production in Canada and the U.S., or Italian production, those are small numbers,” he said. “But for that region, including Algeria, it puts supplies at potentially a 21-year low. We’ve already seen some increased demand from that region, but the anticipation going forward there's even going to be greater demand from that part of the world, so that's a positive.
“But that's being paired against an Italian crop that is looking quite good right now and it’s larger than a year ago,” he continued. “I think that’s what the market will have to sort out over the next couple months – is the increase in the Italian crop going to be enough to offset shortfalls in North Africa?”
Along those lines, as the Canadian and U.S. northern durum crops develop further, the market will get a better sense on what the supplies are like from this region. Right now, Peterson said the market “experts or analysts” are anticipating stable to higher production in both Canada and the U.S. compared to a year ago.
But in mid-May, there were still some areas seeing planting delays. As of May 22, North Dakota was only 38 percent planted, off the average of about 50 percent by that date. Montana was doing a bit better at 55 percent planted, which is close to the five-year average of 61 percent.
Although the weather lately has been more conducive for catch-up planting, certainly a portion of the crop will be planted later than normal.
“That has some market observers already thinking the March estimate, at least for North Dakota plantings, was too optimistic,” he said.
North of the border, Canadian planting as of mid-May was a bit behind at 38 percent complete. Normally, Canada is closer to 50 percent done. As in North Dakota, Canadian producers have battled the cooler than normal spring and soil temps that have been more challenging to warm up.
Source: agupdate.com
Photo Credit: GettyImages-Alex Chai
Categories: North Dakota, Crops, Wheat