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WMR-World Durum Stocks Remain Tight as Focus Shifts to 2023

By: Jim Peterson
Posted: Mar 02 2023

Durum prices have retreated significantly from highs set in the fall of 2021 and early 2022, primarily due to rebounds in production in 2022 across the U.S. and Canada.  The market seems comfortable at current levels, confident that the 2023 crop will quickly replenish declining inventories in key markets.  

There is little room for adverse weather in the 2023 growing season however, or sharply reduced plantings in the U.S. or Canada this spring.  Projections for ending stocks in the U.S., Canada, the EU and the balance of the world, by June 2023, on an aggregate basis, will be the lowest in 15 years, according to the International Grains Council.  Inventories are lower in all key markets compared to four years ago, but the declines are more pronounced in the EU and other world markets.  The U.S. likely has the most comfortable situation of all key markets, but is still well below levels of just four years ago.

Early projections for 2023 EU durum production are about 10% higher, on both increased plantings and also factoring in improved yields.  Similarly, North Africa is looking to rebound over poor 2022 crops, but there are still a few months to go until harvest, and recent dry weather is increasing uncertainty. These higher 2023 projections are taking some of the support out of the market, but the reality is that there is little room for crop shortfalls.   

Some early projections for Canada, indicated a potential 5% decline in durum acres, as producers have indicated they may favor spring wheat and barley due to the narrow price premium for durum.  Similarly, in the U.S. producers seemed to favor spring wheat over durum early in the calendar year, but the recent drop in spring wheat values may be shifting that sentiment.  In addition, crop insurance coverage levels for durum, compared to spring wheat, may support additional durum acres.  Durum coverage looks to be at $10.11/bushel, up nearly $.70/bushel from last year, and a $1.24/bushel higher than spring wheat.  The durum price is based off of a formula that looks at ten-year average prices, so this year the significant premium durum held over HRS in the last half of 2021, and early 2022 is being reflected.
In the U.S., durum acres have been challenged over the last four years, due to both strong crop competition for acres, and in 2022 a wet, delayed planting season.  As the accompanying chart shows, the trend line for U.S. durum has been down over the past ten years, and has been just 1.6 million acres the past two.  Odds favor a rebound in durum acres in 2023, but gains will be tempered by still strong crop competition in durum regions, and ultimately the timing of planting will play a big role, as seen last year. 

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