NEWS for North Dakotans
Agriculture Communication, North Dakota State
University
7 Morrill Hall, Fargo, ND 58105-5665
March 26, 1998
George Flaskerud, Extension Crops Economist
NDSU Extension Service
A substantial increase is expected in U.S. durum acres for 1998. Can the market absorb the increase without a large drop in the price from current levels? What happens to the price now largely depends on production around the world.
One redeeming factor is world carryover stocks of durum. At the end of the current marketing year, they will be low. According to the February issue of the International Grains Council Grain Market Report, combined carryover stocks from the U.S., Canada and European Union are expected to be only 77 million bushels, down from 114 million in 1996-97, 118 million in 1995-96 and 114 million in 1994-95. Stocks have not been this low since 1973-74.
The IGC indicated that Canada's exports of durum during the current marketing year are expected to be record large. Syria was also identified as a major seller.
Because of tight stocks, the durum price has commanded a substantial premium to other classes of wheat. That premium is expected to attract additional acres of durum into production. In addition to a sharp increase in the U.S., planted acres are expected to be up by 10 percent in Canada and by 1 percent in the EU, according to the IGC. Most of the EU increase is expected in France and Greece.
This year's world production increase could offset last year's decrease. World production during the current marketing year was 1,018 million bushels, according to the IGC. A recovery would likely put world production back among levels of recent years: 1,278 million bushels in 1996-97, 1,080 million in 1995-96 and 1,161 million in 1994-95.
Part of this increased production will come from areas of the world that imported substantial quantities this marketing year, in effect from the EU and Northern Africa. The IGC indicated that, as of February, crop conditions in Northern Africa were much improved over the disastrous conditions that prevailed a year ago. A recent media article was less positive about current conditions there.
World trade in durum is highly uncertain. It has varied from 196 million bushels in 1995-96 to 257 million in 1997-98, according to the IGC. Achieving the mid-point of this range in 1998-99 would keep carryover stocks at a modest level. Very good production in the EU and Northern Africa could lead to burdensome stocks of durum.
A modest recovery in carryover stocks during the 1998-99 marketing year to levels seen during the past several marketing years would likely result in a premium price for milling durum over spring wheat. The premium would likely be in the $.50-$1.00 range.
###
Source: George Flaskerud (701) 231-7377
Editor: Barry Brissman (701) 231-7866