Little durum fetching top price

Durum market | Quality issues mean few farmers are able to get top prices at elevators

Durum at the elevator is worth $15 per bushel … and $4 per bu. … and $8 to $9 per bu.

The value depends on multiple specifications that elevators and companies are looking at differently, say analysts in the United States and Canada.

“It’s got to be perfect stuff (for top prices),” said analyst Mike Krueger of the Money Farm, whose clients have been finding elevator bids of US$13 to $15 per bu. in northwestern North Dakota but also discounts of $5 to $6 per bu. if all specifications aren’t made.

Jim Peterson, marketing director with the North Dakota Wheat Commission, is finding the same thing.

Top quality durum is getting bids of $15 to $17 per bu., but farmers generally don’t get anywhere near that price when they deliver to the elevator. Durum that grades as feed sells for $4 or less per bu.

“The majority of producers are falling somewhere between there, based on what the issue is,” said Peterson.

Elevators not only demand a high grade but also excellent vitreous, falling number and protein levels to get the high posted price. Significant DON levels from fusarium infection also knock a durum bid down fast.

“Our biggest challenge comes in our sub-classes,” said Peterson.

Bids and discounts appear to be similar on the Canadian Prairies, said Bruce Burnett of CWB. The best quality durum with all good characteristics can get C$14 to $16 per bu., but most durum isn’t good enough for that and is sharply downgraded.

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“The No. 1 and 2 CWAD values are pretty similar to the U.S. values that we’re seeing now, but virtually nobody has it,” said Burnett.

Multiple problems hit the U.S. and Canadian crops in mid-season. Excessive rain encouraged fusarium and other production problems and then more rain and snow fell at harvest.

Those challenges have produced a plethora of downgrading factors and little North American durum has everything that U.S., European and North African millers want.

The European crop was also poor quality, leaving little high quality durum in the world markets.

Exacerbating the situation is the plight of grain companies and other marketers who forward sold high quality durum before harvest and then found little available to meet their commitments. They are caught in a short squeeze and are desperately trying to find supplies that can meet the specifications to which they are committed.

Port prices at Duluth and Thunder Bay have recently been about US$540 per tonne, or $15 per bu., with higher prices being paid by American millers, analysts say.

Millers and exporters are coping with the situation by paying high prices for excellent durum and blending it with discounted average durum to meet export specifications.

The super-high prices for the best quality crops are being subsidized by much cheaper prices for moderately damaged or lower specification product.

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Analysts advise farmers to test their durum before marketing it to buyers. Not only are farmers best protected by a third party assessment, but it will also help farmers identify the buyer that will be most interested in grain with those specific attributes.

Each elevator and company has a different set of problems.

“It’s not necessarily what grade you have but what caused the grade to fall,” said Peterson.

Buyers with too much high fusarium infection, which means DON levels of more than two parts per million, will not want to buy more durum with high levels.

Buyers with lots of low falling number durum will heavily discount any more low falling number crops that they buy.

Poor vitreous level durum won’t find good bids from elevators that already have too much of that.

Peterson said most North Dakota durum farmers have backed away from selling, partly because they can’t tell from load to load how their durum will be graded and discounted and partly because they see buyers in a short squeeze and hope for even higher prices.

“Durum producers can get bullish pretty quickly, and think if it’s $15, ‘heck, it’s going to $20 and I’ll just sit on it,’ ” said Peterson.

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However, at a certain point buyers will have enough coverage and processors might find alternatives to durum, so Peterson recommends farmers not get too bullish.