There may be production problems in France and possibly higher than usual demand in North Africa, but a large durum crop in North America will easily fill those market voids, says a market analyst.
Consequently, it’s difficult to feel optimistic about durum prices.
“I’m not very friendly on the durum market,” said Chuck Penner, owner of LeftField Commodity Research in Winnipeg.
Reports out of France suggest the quality and size of the wheat crop is even worse than projected. Excessive rain in May and June hammered French crops and obstructed normal development.
The results are now obvious: only 33 percent of the wheat crop was rated as good to excellent as of Aug. 12 compared to 76 good to excellent last year, according to FranceAgriMer, a French agricultural agency.
Harvest is already well advanced and European forecasters last week pegged France’s soft wheat crop at about 28 million to 29 million tonnes, down about 30 percent from last year.
However Strategie Grains, a consultancy, said France’s durum crop has fared better than soft wheat.
Falling European durum prices support the idea that durum supply is adequate.
“In places like Italy and Spain … (durum is) looking quite favourable,” Penner said.
“Prices in Europe continue to drop despite the (situation) in France. That’s telling us that, in aggregate, it’s not too bad.”
One positive sign for the market is that Morocco’s durum crop was relatively small this year, so it and its neighbours in North Africa may import more durum than usual.
However, the problem is that there should be ample supplies of North America durum to satisfy North African demand, Penner said.
With harvest just days away, crop conditions in North Dakota look favourable, but disease might be a problem north of the border.
“Most of the durum areas have received good precipitation, but at the same time we’re not hearing a lot of concerns on disease pressure,” said Erica Olson, North Dakota Wheat Commission marketing specialist.
The U.S. Department of Agriculture reported in June that durum acres jumped in North Dakota to 1.3 million from 1.09 million last year.
North Dakota yields may also be stronger. Reuters reported in late July that a wheat crop tour of the northern Plains estimated durum yields of 45.4 bushels per acre, up from the three-year average of 38.3 bu. per acre.
On Aug. 12 the USDA forecast a U.S. durum crop of 91.7 million bu., up 11 percent from last year.
Durum area is also up in Western Canada, with Statistics Canada estimating acres of 6.1 million, up from 5.82 million last year.
Shannon Chant, regional crops specialist with Saskatchewan Agriculture in Swift Current, said harvest is delayed in the area because of wetter than normal conditions. There are reports of fusarium in durum, but it’s hard to know if it’s a widespread problem.
“I think the bushels will be there. Maybe the quality won’t. There are more concerns about quality than there are about quantity,” said Penner, who has also heard reports of fusarium in Saskatchewan’s durum crop. “(But) I’m not hearing it as loud as I (did) in 2014, when it (fusarium) was really bad.”
G3 Canada’s pool return outlook of late July dropped the pool price for durum by $10 per tonne from its June forecast. G3 now has 1CWAD 12.5 durum at $295 per tonne.
Olson said durum bids in North Dakota in the second week of August were around US$5.75 per bu., about a $1 premium over spring wheat.
Penner said durum producers might face a challenging market this fall because the projected large crop could weigh on prices for months.
“I don’t know if it (the market) is going to (get) much stronger, in much of a hurry,” he said. “Either sell it now or be prepared to sit on it for a while.”