Durum prices have been sky-high south of the border in recent weeks, but a North Dakota marketing specialist says more than half of the U.S. crop was sold well below the market peaks.
Jim Peterson, marketing director for the North Dakota Wheat Commission, estimates about 25 percent of the crop was sold before or immediately after harvest when prices were in the range of $5 to $7 US a bushel.
Another 25 to 30 percent was sold from mid September to early August at prices in the range of $8 to $10.
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In October, elevator prices in North Dakota averaged $13 a bu., he said, topping out as high as $18, but it’s unclear yet how much was sold at those levels.
U.S. Department of Agriculture statistics indicate that Montana farmers received an average of $6.64 a bu. in August, $7.05 in September and $14 in October.
Some Canadian durum growers have used those numbers to criticize the Canadian Wheat Board’s marketing performance.
The board’s Pool Return Outlook for No. 1 CW amber durum, 13 percent, is $469 Cdn a tonne, which works out to a Saskatchewan farmgate price of $11.29 a bu.
But Peterson was reluctant to get into a debate about whether Canadian or U.S. durum growers will do better this year.
“It’s an elusive number to come up with,” he said. “We won’t really know that until next summer, when the national agricultural statistics come out.”
Producers he has talked to have reported averaging anywhere from $9 to $15 US a bu., depending on when they sold, how much they sold and where they sold it.
A late October news release from the state commission suggested durum prices received by U.S. growers would average “close to $10” in 2007-08.
Petersen added he doesn’t think much durum was sold at $17 to $18.
“We’re not seeing a lot of large volume sales being made at these price levels.”
Most of the demand in the last couple of weeks at those high prices is reflecting things like filling spot orders, delays in getting rail cars or domestic mills that were caught short on supplies.
He said farmers are likely still holding 30 to 50 percent of their crop, some for seed and some for speculative stocks.
The USDA is projecting durum stocks will be drawn down to about 517,000 tonnes at the end of the U.S. marketing year May 31. That is 600,000 tonnes lower than a year ago and 1.1 million tonnes less than the year before that.
However, Peterson thinks stocks could go lower than that based on continued strong export movement through the winter and spring.
He said producers are already looking ahead to next year, with the possibility of a big increase in plantings as a result of the strong market.
Indications are that acreage of desert durum in California and Arizona, the first durum to go into the ground, will increase from about 150,000 acres last year to around 250,000 acres in 2008, based on contracts of $8 to $10 a bu. for May-June 2008.
With attractive prices available for other commodities like spring wheat, flax and malting barley, durum buyers will have to compete for acreage.
“The message from our producers to the industry is that sooner rather than later they’ll have to come out with 2008 contracts at prices that can compete,” said Peterson.
He said input costs could be a major factor in determining 2008 durum plantings. Seed is now priced around $20 bu., and total input costs could be around $30 an acre.
Whether farmers will be willing to pay that much to grow durum will depend in large part on the price outlook. Some elevators have been posting 2008 prices around $7.50 a bu., but Peterson said those are speculative offers designed to secure supplies, because end users haven’t yet put out their formal contract offers.
