Wheat | Durum Wheat Prices Rising Slower than Spring Wheat

Wheat Prices

Durum wheat hasn't followed the trend of its spring wheat counterpart, as it lages behind the higher prices spring wheat have brought so far this year.

Though some local cash durum prices have risen slightly they have not risen at the same level as spring wheat.

“Unfortunately durum hasn't enjoyed the same price increases as hard red spring wheat,” Olson said. “In fact, durum cash prices around the state are less than hard red spring wheat prices in some cases.”

Local cash bids for durum are anywhere from $6.75 to $7.25, which is just slightly higher than a couple weeks ago.

One of the major reasons spring wheat prices have appreciated so much recently is because planting is so far behind the usual pace. And although durum planting is also behind the normal pace, it is not as far behind as spring wheat.

In North Dakota, 69 percent of the durum crop has been planted compared to an average of 77 percent - just eight percentage points behind. Spring wheat in North Dakota, on the other hand, is 79 percent complete versus an average of 95 percent - a difference of 16 percent.

In one week, durum planting progress jumped by over 40 percent due to the good planting conditions the week of May 18-24.

In Montana, about 70 percent of the durum crop has been planted. That compares to an 84 percent average.

Olson pointed out that emergence for durum is also behind due to cooler than normal conditions this spring, but the recent warmer temperatures should help promote emergence and crop development.

The U.S. desert southwest durum crop is getting ripe and harvest is expected to begin soon.

“Right now about half the crop is mature,” Olson said. “There doesn't appear to be any major issues with that crop and we're expecting to see both good quality and good yields.”

To the north, Canadian producers are also experiencing a late planting season, but they have other concerns as well.

“In Canada there's actually some concerns that it's getting too dry in some of the major durum producing regions, so that obviously could impact planted acres and production,” Olson said.

In Europe, the only production concern is that wet weather and poor crop conditions have cut the estimate for durum production in italy from 147 million bushels to 127 million. North Africa has seen “near perfect growing conditions” so their production will be well above last year's levels, according to Olson.

U.S. durum exports lately haven't been overly supportive for prices either.

Wheat Prices

Wheat News | Wheat Inventories in India to Remain Huge

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Wheat inventories in India are likely to remain large given the expectation of another bumper crop this year and limited export opportunities, said the Food and Agriculture Organization (FAO) of the United Nation in its latest report.

Inventory in India, another major producer and stockholder, is forecast to remain unchanged at a five-year high of 17.8 million tonnes. But another bumper year for wheat in 2010 may increase the inventory further, said the report. The forecast assumes significance as the country has not opened wheat for exports despite excessive supplies in the domestic market.

Since, the United Progressive Alliance government has been formed without any alliance pressure and most importantly, the inflation remains under control, trade sources estimate the government may allow wheat exports in near future primarily because of global trade deficit.

FAO’s first forecast for wheat trade in 2009-10 stands at 114 million tonnes, down as much as 8 per cent, or 10 million tonnes from the estimated 2008-09 record volume.

Wheat export was suspended in May 2007 to control inflation that shot up over 13 per cent. The government also suspended futures trading in wheat due to the fear of price rise on traders’ speculation.

Meanwhile, FAO has estimated India’s wheat production to decline marginally by one per cent to 77.6 million tonnes in 2009 on favourable climatic condition throughout the season.

The specialised agency of the United Nations, which leads international efforts to defeat hunger, has forecast global wheat output to decline by 4 per cent to 655.8 million tonnes in 2009 compared with 684.6 million tonnes in the previous year.

The agency estimates total course grains’ output to remain rangebound at 37.8 million tonnes this calendar year compared with 38 million tonnes in the last year.

But, the global coarse grains production is likely to decline by 4 per cent at 1,098.5 million tonnes this year compared with 1,142.3 million tonnes in the previous year.

The 2008 paddy season has just been completed with the harvesting of secondary crops in Asia. Boosted by excellent results of these crops, global paddy production is now estimated at 689 million tonnes, equivalent to 460 million tonnes of milled rice, well above earlier expectations and 4.3 per cent more than in 2007.

But the sector’s attention is now turning to the 2009 season, which is already well advanced in all but the critically important south-eastern Asian region, where farmers are awaiting the imminent arrival of the monsoon rains to plant their crops.

Preliminary information on plantings and crop development over the 2009 season has been favourable. As a result and assuming a normal rainfall pattern in Asia in the coming months, world production in 2009 could gain a further 1 per cent and reach 696 million tonnes (465 million tonnes, milled equivalent), FAO said.

The relatively moderate increase expected in 2009 reflects less attractive prospects for producer returns. However, in spite of financial constraints, many governments have maintained their support to the sector through input subsidies, investment programmes and direct price incentives, which, barring any major setback, is likely to sustain production growth.

Trade sources estimate India’s rice output to remain rangebound at 147 million tons in 2009 provided monsoon arrives in time and distributed evenly.

Wheat