Durum wheat, a key component in many food products, witnessed a price rise in August, only to decline soon after. Jim Peterson from the North Dakota Wheat Commission offers insight into this behavior.
This drop, Peterson explains, is largely due to harvest progress. Towards summer end, concerns regarding crop yield arise, especially considering factors like heat and dry conditions. Yet, when harvest season dawns, the yield often turns out better than expected, easing market concerns.
Despite some regions producing below-average yields, some areas have reported better numbers, with averages aligning with the USDA's current estimates. This has somewhat affected the market's momentum.
Another intriguing aspect is durum's distinct behavior in the market. While other wheat classes witnessed a retreat since July end, durum flourished. At one point, the price difference between durum and hard red spring wheat was significant, making durum more appealing.
Such price spreads trigger discussions about substituting hard red spring wheat for durum in some pasta products. With wider spreads, this substitution could become more prevalent, Peterson predicts.
The global inventory of durum wheat is also a critical factor influencing prices. Inventories in Canada and the US are expected to tighten throughout the year. Major replenishments might only be possible next spring, after Europe and North Africa's harvest. This gap could mean robust support for durum once demand surges.
Peterson emphasizes durum's unwavering demand in markets like North Africa and Europe. These regions heavily rely on durum for products like couscous and premium pasta.
While harvests are in progress, defining the quality remains challenging. Certain regions experienced ill-timed rains affecting the crop's color. Still, high-quality durum harvests promise notable premiums over spring wheat.
Discussing exports, Peterson notes that the U.S. has significant export sales. Many of these sales await registration, indicating potential North African or European demand. Market patterns suggest prices might stabilize or even rise as demand becomes clearer.
On the domestic front, mills have substantial extended coverage, possibly until December. The pasta sector's coverage is less clear, though pasta demand remains strong.
Peterson highlighted global influences on durum's market, stating that Canadian crop expectations have decreased, and factors like Europe and North African demand, along with harvest results from North Dakota and Montana, will determine prices in the coming months.
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Categories: North Dakota, Crops, Wheat