2015 U.S. Durum Supply and Demand
By Stephanie Bryant-Erdmann, USWheat Associates Market Analyst
As everyone who works in the wheat industry quickly learns, the durum market is unique and, as one grain merchandiser puts it, “Durum is an entirely different beast.” Unlike the other classes of U.S. wheat, demand for durum links directly to demand for specific foods, including pasta, couscous and Mediterranean breads. In 2014, global sales of pasta reached $28 billion, according to Euromonitor. This demand, coupled with quality issues in the 2013/14 crop, led to greater than normal market volatility, had challenged USW to provide meaningful values for durum customers in its weekly Price Report. However, with this year’s high quality durum crop safely in the bins, USW resumed durum price reporting Oct. 2 at www.uswheat.org/prices.
2015 U.S. Durum Supply. The United States has produced a five-year average of 1.91 million metric tons (MMT) of durum across six states: Arizona, California, Idaho, Montana, North Dakota and South Dakota. This year, USDA estimates that durum production will reach 2.24 MMT, up 53 percent from 2014. On average, durum production accounts for three percent of total U.S. wheat production, but in the history of the USW Price Report, it has averaged a $1.60/bu ($58/metric ton) premium over the other five classes of U.S. wheat.
U.S. durum is categorized by the location of its production as either northern durum or Desert Durum®. Northern durum, which accounts for 74 percent of U.S. durum production, grows predominately in Montana and North Dakota with additional acres in Idaho and South Dakota. Montana and North Dakota saw a 43 percent and 31 percent increase in planted durum acres in 2015, respectively, due to attractive prices and favorable weather at planting time. The increase in planted acres put North Dakota — the largest durum producer in the United States by both acres planted and bushels produced — back above one million acres of durum for the first time since 2012. USDA estimates North Dakota produced 1.16 MMT in 2015. Not only is production up this year, but also quality, North Dakota Wheat Commission Marketing Director Jim Peterson reports.
“Producers could not have asked for better planting conditions in North Dakota,” Peterson said. “Durum planting finished three weeks earlier than average this spring, and a good growing season followed that resulted in high yield potential. Farmers were able to get that quality in the bins because we also had a really good harvest period. I think buyers are going to be very pleased with the available durum quality this year,” he added. “Average test weight, protein and vitreous kernels are all up, while moisture, dockage and total defects are down.”
The Desert Durum® trademark applies only to durum produced under irrigation in Arizona and California, and is often delivered to domestic and overseas customers “identity preserved” to allow buyers to purchase varieties with intrinsic qualities specific to their needs. Desert Durum® accounts for an average 10 percent of total durum acres, but 26 percent of total durum production due to an average yield of 101 bu/acre (6.79MT/ha).
Michael Edgar, AGRPC and USW board member, noted, “Desert Durum® is known for its reliability and high quality, and because our harvest occurs while the northern crop is planted, the United States is able to deliver high-quality durum year round.”
In preliminary crop quality data for the northern durum crop, USW reported the average grade is No. 1 hard amber durum (HAD) compared to the 2014 average grade of No. 2 amber durum (AD). The average falling number is 420 seconds, demonstrating a sound crop, and significantly better than the 2014 average of 291. The 2015 Desert Durum® crop values are typical, with an average grade of No.1 HAD and a test weight of 62.4 lb/bu (81.3 kg/hl).
2015 Durum Demand. The International Grains Council (IGC) expects world durum 2015/16 production to increase by 11 percent to 36.1 MMT this year. Algeria, the second largest U.S. durum buyer, expects to double its durum production from 1.3 MMT in 2014 to 2.5 MMT this year. Morocco, Syria, Turkey and the European Union (EU) also expect increases in production. If realized, the resulting decrease in demand from these markets will result in a 13 percent decline in world durum trade. However, on Oct. 2, StatsCan reported that Canada, the world’s largest single-country durum producer, would produce the smallest durum crop in three years at 4.74 MMT, a 9 percent decline from marketing year 2014/15 due to drought in key durum producing areas. Therefore, there is still demand for U.S. durum, as the USDA weekly export sales data demonstrates.
As of last Thursday, Oct. 1, U.S. durum exports totaled 514,000 MT, which is 190 percent of 2014 total U.S. durum sales to all countries on the same date. Of that, 63 percent or 325 MMT of durum has been exported to Italy, the largest buyer of U.S. durum, and number one consumer of pasta per capita in the world. Euromonitor reports that on average, every Italian consumes 58 lbs. (26.3 kg) of pasta each year. As a comparison, U.S. consumers eat only 8 lbs. of pasta annually. USDA expects U.S. durum exports to reach 1.09 MMT this year.
As the main ingredient in pasta, this data on durum arrives at a convenient time. Domestically, the United States recognizes October as National Pasta Month and on the international level, Oct. 25 marks the World Pasta Day celebration.