Reading Time: 2 minutes

MarketsFarm — Cool and wet conditions delaying harvest operations across North America’s durum-growing regions are cutting into the quality of the crop in both the U.S. and Canada, with widening price spreads likely going forward.

“It’s been a challenging harvest,” said Erica Olson, marketing specialist with the North Dakota Wheat Commission.

“We did have some good crop come off with good quality and yields, but a sizeable chunk of our durum is still out there,” said Olson, noting the Canadian crop faces the same issues.

About 10 per cent of North Dakota’s spring wheat crop was still in the field as of Sunday, according to the weekly U.S. Department of Agriculture crop progress report.

About 43 per cent of Saskatchewan’s durum was also unharvested in the latest data out of that key durum-growing province.

“Going forward, we’re expecting prices for the highest-quality top milling grades to continue to increase,” said Olson.

“Only about 30 per cent of this crop will be No. 1 and No. 2,” said Jerry Klassen, manager of Canadian operations with Swiss-based GAP S.A. Grains and Products in Winnipeg. He estimated another 30 per cent at No. 3 and the remaining 40 per cent “No. 4 or lower.

“There will be some blending, there’s no doubt about,” he said.

“For the first half of the crop year, the ones and twos will carry a significant premium over the threes,” he said, but he expected that premium to narrow moving into the second half of the marketing year as grain companies adjust their positions.

Durum bids in North Dakota are currently topping out at about US$6 per bushel, which represents an improvement of about US$1.20 over the past month. Canadian prices have also rallied over the past month, with posted bids in the C$8-$8.50 area.

Klassen said the current strength in durum prices was tied to commercial traders in the middle, with large sales on the books they now need to cover. That previously contracted business will be filled early in the new calendar year.

At that time, the market will likely shift as end-users will then also face tighter supplies and higher prices.

“Europe did have some challenges with their crop as well, and we’ve been seeing good demand from Italy this year,” said Olson. She added that there was potential demand in North Africa, as Morocco’s crop was smaller on the year.

Klassen said Italy has a big program on already, but won’t be making additional purchases until January. Algeria was also well covered for the time being, but he said Morocco would likely need to buy “a couple hundred thousand tonnes” in the next month or two.

Lower-quality durum will likely end up in domestic feed channels, but Klassen said the Southeast Asian fish feeding market has also been a buyer in the past. It will buy feed durum with higher protein levels, but that market may not be as strong this year due to lower average proteins.

Statistics Canada’s most recent estimate pegs the 2019-20 durum crop at 4.998 million tonnes, which would be down from the 5.745 million grown the previous year.

The U.S. Department of Agriculture puts U.S. durum production at an estimated 1.56 million tonnes, down by about half a million from 2018-19.

— Phil Franz-Warkentin reports for MarketsFarm, a Glacier FarmMedia division specializing in grain and commodity market analysis and reporting.