Quality Problems Send Durum Prices Soaring

Quality problems with this year’s durum crop in Italy and France, combined with the worst quality crop on record and lower yields in Canada, have resulted in skyrocketing prices for durum.

Buyers are scrambling to find higher quality supplies for pasta production, says Neil Townsend, director of market research with CWB, in the interview below.

“The marketing year started with very poor quality results in Europe, which diminished their overall supply of food quality durum. It heightened their interest in buying Canadian durum and meant there was less available for markets in North Africa,” he explains. “Fast forward to the Canadian crop, and we don’t need to tell farmers in Western Canada what happened, but the end result is the worst durum quality profile on record.”

CWB Market Research is estimating only 23 percent of the Canadian durum crop will be graded as 1 or 2.

“People have probably slammed the brakes on selling it, but even accumulating the initial cargoes that were sold at those specs is proving to be very difficult. We’ve seen explosive pricing happening at FOB positions, particularly on the track market in the United States,” explains Townsend, noting prices on rail in Chicago have hit $20 a bushel. The projected return for number 1 Canadian Western Amber Durum in CWB’s annual pool (in store Vancouver or St. Lawrence) currently stands at $471 a tonne, up from $383 in late August. Durum prices reported by the Alberta Wheat Commission have also increased in the range of $65 to 85 per tonne since late August.

That’s all good for producers who have high quality durum, but what are the options for marketing the other three-quarters of the crop that CWB expects will fall outside the top two grades?

Blending could be beneficial with mid-grade durum, as Townsend says it’s possible to blend two lower grades into a number 2 sample.

“Part of the quality breakdown this year is that different regions have different things impacting durum quality. In some areas it’s sprouting and in other areas it’s fusarium,” he explains. “You should look to work with buyers to see if there are blending opportunities. Maybe they’ll take your number 3 or 4 and slap it together with someone else’s and end up with a number 2. That is possible to a certain extent.”

The options or opportunities become much more limited with lower quality durum.

“When you get down to the number 5 durum. There’s not much that’s going to help a guy there. The world is super-abundant in coarse grains,” he notes.

The market for durum will be discussed at the Cereals North America market outlook conference, which CWB Market Research Services is co-hosting in Winnipeg this week.