http://www.theprairiestar.com/articles/2009/09/04/ag_news/markets/market14.txt
USDA bumps durum production estimate By MARK CONLON, EditorThursday, August 27, 2009 1:00 PM MDT Despite a slow start to the planting season, this summer has seen near ideal growing conditions in many parts of the durum region. As a result, USDA has bumped up its yield projections for the 2009 crop which has pressured prices.“USDA's August report was quite bearish in terms of the supply outlook,” said Jim Peterson, marketing director for the North Dakota Wheat Commission.In its report, USDA increased the projected yields in North Dakota by 8 bushels per acre - from 26 bushels per acre in its July report to 34 bushels in August.“That's a 31 percent increase in yield,” Peterson noted. “Last year's yield was 25 bushels per acre.” USDA also increased the yield estimate in Montana by seven bushels per acre - from 19 bushels in July to 26 bushels per acre in the August report. Last year's yield was also 19 bushels.There was no change in the U.S. desert durum production estimate in California and Arizona, but with that level of change in North Dakota and Montana, U.S. production skyrocketed all the way up to 98 million bushels versus 85 million last year, “and that's on 150,000 less planted acres,” Peterson said. Peterson noted that the market had been anticipating some revision higher in terms of the U.S. crop size, but not this high.“Most analysts were still probably putting it in mid to upper 80s, so the higher 90s has really given buyers added comfort or cushion as we go forward,” he said. “It will take a pretty good demand boost in term of exports to help tighten up the pipelines a little, either that or some adverse harvest weather in the U.S. or Canada, which would also tighten up the high quality durum stocks, which would add some strength to the top of the market.“However, as a producer, you hope it's not you that has the adverse weather,” he continued, adding that the best situation would be some quality issues with the Canadian crop to really help our prices.With the new expected level of production, U.S. ending stocks could reach 51 million bushels by June of 2010, according to Peterson. That would be the largest ending stocks level since 1998. The late '90s and early 2000s were a weaker price period for durum as well due to large inventories at that time.“To put the 51 million bushels in perspective, in June of this year our inventories were 25 million bushels and in June of 2008 our inventories were 8 million,” Peterson said.However, Peterson pointed out, the crop is not in the bin yet. Harvest was only two percent complete as of Aug. 16 in Montana and North Dakota. The more typical level is around 30 percent complete as of that date.“The crop has very good potential, but the longer it sits in the field and the longer it has to ripen, the more chances there are for an early frost impacting it, or extended rainy periods or hail,” he said. “On paper it certainly looks like we will have strong production, but until we get it in the bin... That's still the wild card.”The potential of this year's crop has been impacting the market for the past several weeks. Prices have been trending lower based on production potential while also following in sympathy with other commodities.As of Aug. 20, local cash prices for durum ranged from $4.70 to $5.25 with an average of $5.“That's the lowest we've been in the last two years. How much lower prices can go depends on the yield and quality,” Peterson said. “If the combines confirm the stronger yields and there are no significant quality issues, one could speculate that prices could drop lower based on the supply rebound which appears to be happening with 2009 crop.”That, he added, puts more onus on stronger export markets.On a positive note, durum is one wheat class that is showing a stronger export season so far. Sales to date were at 13 million bushels compared to 10 million this time in 2008. USDA is projecting durum sales of 30 million bushels versus 24 million last year.“So we're kind of on that target,” he said.The one country the U.S. is going to have to target aggressively is Italy, according to Peterson. The European durum crop was down from last year, but the only country that had quality problems last year was Italy, which was 40 percent lower than the year before.“So that holds the best export potential,” he said.“And some years, if durum gets cheap enough, it can move into bread markets to pick up some demand. But with the lower prices of other wheat classes that would be difficult, so we need to see exports to our traditional pasta markets pick up,” he added.Domestic durum use is projected to have another strong year.One thing that will help is the fact the Canadian durum crop is smaller than a year ago. On Aug. 21 Stats Canada estimated this year”s crop at 166 million bushels, way down from the 203 million bushel crop in 2008.“With the EU and Canada both lower in crop production, it opens more doors to the U.S. for exports,” Peterson said. “But both those countries have good inventories from last year, so it looks in the near term to be a challenging environment for prices.“Hopefully, as the year progresses and harvest is completed, there will be some opportunities for price appreciation in the winter months,” he said.
USDA bumps durum production estimate By MARK CONLON, EditorThursday, August 27, 2009 1:00 PM MDT Despite a slow start to the planting season, this summer has seen near ideal growing conditions in many parts of the durum region. As a result, USDA has bumped up its yield projections for the 2009 crop which has pressured prices.“USDA's August report was quite bearish in terms of the supply outlook,” said Jim Peterson, marketing director for the North Dakota Wheat Commission.In its report, USDA increased the projected yields in North Dakota by 8 bushels per acre - from 26 bushels per acre in its July report to 34 bushels in August.“That's a 31 percent increase in yield,” Peterson noted. “Last year's yield was 25 bushels per acre.” USDA also increased the yield estimate in Montana by seven bushels per acre - from 19 bushels in July to 26 bushels per acre in the August report. Last year's yield was also 19 bushels.There was no change in the U.S. desert durum production estimate in California and Arizona, but with that level of change in North Dakota and Montana, U.S. production skyrocketed all the way up to 98 million bushels versus 85 million last year, “and that's on 150,000 less planted acres,” Peterson said. Peterson noted that the market had been anticipating some revision higher in terms of the U.S. crop size, but not this high.“Most analysts were still probably putting it in mid to upper 80s, so the higher 90s has really given buyers added comfort or cushion as we go forward,” he said. “It will take a pretty good demand boost in term of exports to help tighten up the pipelines a little, either that or some adverse harvest weather in the U.S. or Canada, which would also tighten up the high quality durum stocks, which would add some strength to the top of the market.“However, as a producer, you hope it's not you that has the adverse weather,” he continued, adding that the best situation would be some quality issues with the Canadian crop to really help our prices.With the new expected level of production, U.S. ending stocks could reach 51 million bushels by June of 2010, according to Peterson. That would be the largest ending stocks level since 1998. The late '90s and early 2000s were a weaker price period for durum as well due to large inventories at that time.“To put the 51 million bushels in perspective, in June of this year our inventories were 25 million bushels and in June of 2008 our inventories were 8 million,” Peterson said.However, Peterson pointed out, the crop is not in the bin yet. Harvest was only two percent complete as of Aug. 16 in Montana and North Dakota. The more typical level is around 30 percent complete as of that date.“The crop has very good potential, but the longer it sits in the field and the longer it has to ripen, the more chances there are for an early frost impacting it, or extended rainy periods or hail,” he said. “On paper it certainly looks like we will have strong production, but until we get it in the bin... That's still the wild card.”The potential of this year's crop has been impacting the market for the past several weeks. Prices have been trending lower based on production potential while also following in sympathy with other commodities.As of Aug. 20, local cash prices for durum ranged from $4.70 to $5.25 with an average of $5.“That's the lowest we've been in the last two years. How much lower prices can go depends on the yield and quality,” Peterson said. “If the combines confirm the stronger yields and there are no significant quality issues, one could speculate that prices could drop lower based on the supply rebound which appears to be happening with 2009 crop.”That, he added, puts more onus on stronger export markets.On a positive note, durum is one wheat class that is showing a stronger export season so far. Sales to date were at 13 million bushels compared to 10 million this time in 2008. USDA is projecting durum sales of 30 million bushels versus 24 million last year.“So we're kind of on that target,” he said.The one country the U.S. is going to have to target aggressively is Italy, according to Peterson. The European durum crop was down from last year, but the only country that had quality problems last year was Italy, which was 40 percent lower than the year before.“So that holds the best export potential,” he said.“And some years, if durum gets cheap enough, it can move into bread markets to pick up some demand. But with the lower prices of other wheat classes that would be difficult, so we need to see exports to our traditional pasta markets pick up,” he added.Domestic durum use is projected to have another strong year.One thing that will help is the fact the Canadian durum crop is smaller than a year ago. On Aug. 21 Stats Canada estimated this year”s crop at 166 million bushels, way down from the 203 million bushel crop in 2008.“With the EU and Canada both lower in crop production, it opens more doors to the U.S. for exports,” Peterson said. “But both those countries have good inventories from last year, so it looks in the near term to be a challenging environment for prices.“Hopefully, as the year progresses and harvest is completed, there will be some opportunities for price appreciation in the winter months,” he said.