PONTE VEDRA BEACH, FLORIDA, US —With as many as 36 inches of snow blanketing the entirety of North Dakota and wintry temperatures yet to wave a white flag, it’s possible US northern Plains durum farmers could suffer through a second straight weather-clipped shot at seeding.  

But that’s just one potential factor among a lengthy compilation of coefficients and exponents factoring in the calculus for durum and semolina market participants in 2023. Luckily for National Pasta Association (NPA) members, they had a willing guide through the cosmos at the group’s annual meeting in late March.

James Peterson, policy and marketing director, North Dakota Wheat Commission, Mandan, North Dakota, US, synthesized the numerous considerations that chronicle a crop still finding a new post-pandemic normal, both domestically and around the world.

In the US northern Plains

The bulk of the US durum crop will go in the ground amid more comfortable US supply levels than last year, a projected 5% increase in food use and export levels up 68% year-over-year, Peterson said, plus producer prices off their peaks but still above 2021 lows set just before a severe drought that year hampered yields, cut into production, limited carryover and boosted prices. Growers were stymied in their attempts to take advantage the following year.

“Your main ingredient is pretty dependent on weather,” he told pasta manufacturers and milling members of the NPA March 21. “And many durum production areas don’t get the same precipitation as other US crop areas. It’s a pretty narrow base, so adverse US and Canada weather can have a pretty dramatic impact. Producers intended to plant more in 2022 but were dealt a tough hand with April snowstorms, pushing seeding out into June. A lot of intended durum acres couldn’t get planted, so the grower had to look to other crops or take prevent-plant insurance payouts. That could be a real issue again this year since both the US and Canada just had very cold late February-early March periods. We’ll need a warmer April to avoid another delayed planting season.”

The durum crops of North Dakota and Montana typically would be seeded starting mid- to late-April, all weather being cooperative. That still could happen if temperatures upshift quickly, thawing a snow blanket measuring between 12 and 36 inches. Snow melt and timely planting would help the moisture-challenged region maintain yield and production recovery trendlines that bounced off 2021’s severe drought and shrugged off a short, wet planting season in 2022.

Analysts are split on planting intentions for harvest in 2023. The cash durum bid premium to hard red spring wheat so far this spring, plus initial crop insurance coverage levels, favor increased durum acres, Peterson pointed out, though he said no widespread switch to durum was expected since competitive crop options will blunt the impact of acreage gains.

Domestic durum prices are off from their peak of a little over $12 a bushel a year ago to just under $9. That’s still well above the lows of early 2021. And the US Department of Agriculture projects a 5% increase in food use of durum based on strong pasta demand. When the spread between durum and hard red spring wheat widened to $3, Peterson explained, more spring wheat was added to grinds for some pasta products.  

“That may be shifting back a little bit,” he said, considering the “supply chain issues of 2022 from transportation to packing material to labor. Demand could have been higher if not for these issues and demand still has not returned to COVID-level peaks of 88 million bus used for food.”

Crop insurance is undoubtedly part of growers’ planting calculations and provide some additional incentive in 2023. Spring wheat insurance prices are set by the USDA’s risk management agency based on average price of Minneapolis September futures during February, Peterson said, and durum values are then based on spring wheat. For the past two years, durum was only a 25¢ per bushel premium to spring wheat; this year it’s a $1.24 a bushel premium, USDA and North Dakota Wheat Commission data indicated.

At the same time, production costs for all crops have jumped from 2022’s historic levels, North Dakota State University’s December budgets showed, with interest costs on operating lines of credit, fuel, machinery, chemicals and land all higher. Despite profit margins squeezed due to the decline in commodity prices, durum looks profitable enough to compete, Peterson said, yet features a yield drag to spring wheat and significantly more harvest quality risk.

Another healthy demand signal comes in the export market for US durum. Thanks mainly to sales to Italy and Algeria, current year-to-date exports are 68% higher than a year ago, at 11.7 million bushel. Still, US prices haven’t been competitive in recent tenders from Algeria and Tunisia, Peterson said, Canada has outpaced the United States in durum sales to Italy and Mexico, and Russia/Ukraine have taken some US demand.

Crop rotation disruptions are also on producers’ minds, Peterson said.

“Last year’s late planting temporarily threw off some crop rotations, which are much more important to producers thinking about the push for soil health, environmental concerns and for the bottom line, more efficient management of inputs, spreading out the risk over multiple crops, harvest times, and helping with labor and quality risks,” he said. “Some producers will seed more oilseeds and pulses in 2023 to bring rotations into balance.”

Peterson said he thinks durum plantings will increase in 2023, but production hinges on the above factors, plus the nominal drought.

“Ironically, much of the area is still listed as moderate drought according to the US Drought Monitor, but we’re currently having a cold spring, with frequent snow,” he said. “If you try to take a soil probe today, you’d have to go through about 30 inches of snow to reach the soil. What they’re calling a drought is a little bit of a misnomer. We hear a lot of talk about how dry it is in Kansas and Oklahoma. Obviously, that is real, very dry. In our area, it’s still early. If we see a normal spring warm-up, starting moisture will be beneficial for the crop. If spring remains cold and wet, then expect delays across the region, which could limit acres again. Intentions on durum acres could quickly change.”

In the US desert

The portion of the US crop seeded to durum in the deserts of California and Arizona for harvest in 2023 is projected to be down 28% year-over-year to 90,000 acres, the USDA said. Because the desert durum planting window extends into January, the planted area figure released late last year could still increase, Peterson said. But considering “durum didn’t really have a price response in January, it’s probably going to hold pretty close,” he said.

In 2022, the desert durum planted area was 125,000 acres and production was estimated at 13.5 million bushel. A planting decrease for 2023 was expected, but initial survey estimates came in lower than analysts anticipated, Peterson said. Contributing factors included the sharp decline in durum prices in the fall of 2022, desert farmland water restrictions, high water costs during planting and strong competition from feed and forage markets for dairies, he said.

Based on acreage estimates as of mid-March, production of 9 million to 10 million bushels of desert durum can be expected, Peterson said, which if realized would still come in above levels seen between 2019 and 2021.

In the Canadian prairies

The early 2023 projections indicated a 6% decline in Canadian durum plantings in favor of other crops offering better returns, Statistics Canada said. The question Peterson posed is whether the figure had shifted to a more stable acreage number as spring wheat values downshifted in February and March.

Drought conditions are still present in the Saskatchewan prairies, though not to the severity of spring 2022. Also, Canadian durum country has had less winter precipitation than US durum areas.

“US and Canadian durum has had a significant yield drag to spring wheat in recent years,” Peterson said. “Part of that is where it’s grown since the durum region has been drier, and some of it is genetic, although there are some pretty high yield potentials on some of the new releases. Durum values need to be at a premium over spring wheat in both the US and Canada because yields have trended lower on durum in the past 10 years, whereas spring wheat yields have been relatively flat. Yield drag is becoming a more concerning issue.”

Even with fewer plantings, the recovery in Canadian durum production is expected to continue in 2023 due to rebounding yields. Statistics Canada said production was 241 million bushels in 2020, plummeted to 110 million bus in drought-plagued 2021, and rebounded to an estimated 198 million bushels in 2022. Planted acres increased last year, but a bout of mid-summer dryness meant Canadian durum yields didn’t recover as much as their southerly neighbor. Canada’s excellent overall quality helped keep their export sales to the United States and Europe robust, so ending inventories are at historic lows, Peterson said.

For their durum marketing year ending July 31, Statistics Canada reported ending durum stocks of 29 million bushels in 2021, 22 million bushels in 2022 and projected 18 million bushels in 2023.

“You can see that the world durum market, especially in the US and Canada, is not operating on the cushion of stocks that we have been,” Peterson said. “We anticipate stable production in the US and Canada, though acres and yields are unknown. Market values as seen easing as EU and North African harvests approach, but they’re still underpinned by the fact that world durum inventories are at 15-year lows with the EU and Canada extremely tight.”

In the world market

Setting the scene in global durum for 2023 is a larger crop, an export trade expansion, a price retreat from historic levels; a pasta demand resurgence in select areas; and ending inventories at 15-year lows.

World durum prices rallied toward historic highs beginning in late 2021 after Canada and US northern durum harvest yields were significantly limited by severe drought conditions. When Russia invaded Ukraine in February 2022, most commodity prices began to soar and durum values followed.

A production recovery trendline developed with the world 2022 crop thanks to a rebound in US and Canadian durum. But at 1,200 million bushels, up from 1,150 million bushels in 2021, world production fell below the preceding five-year average, International Grains Council (IGC) data shows. The primary culprit was shortfalls in the European Union and North African crops, Peterson said. The former notched one of its smallest crops in 25 years — 255 million bushels — while North Africa, which typically produces about half of all durum traded globally and acts as a barometer for world durum, had various production problems in 2022, he said.

“Certainly, compared to five years ago or the recent peak of 1,477 million bushels in 2016, we’re not seeing the same levels of production,” Peterson said. “It’s weather-driven, call it climate change, but also tremendous crop competition. Not as much in the US and Canada, but worldwide there is incentive to try to produce more oilseed crop and corn is still very competitive for acres.”

World durum crop production is projected to be larger in 2023, including expectations EU production could jump by 6% to 10% from 2022 and that North African production will rebound, he said.

In the past year, world durum trade expanded with increased imports from the European Union and Morocco. World durum values retreated and initiated a recovery in pasta consumption in certain segments of the world, Peterson said, although he noted international demand had not returned to pandemic-era peaks.

As for world durum imports, IGC numbers for 2022 show stability in Algeria, Tunisia and the United States, and large increases in the EU, Morocco and “other.” The latter spiked in 2019 on a huge increase in imports for Turkey. Turkish imports retreated in 2020-21, but jumped again in 2022, Peterson said.

“That’s important to keep in mind, because recently Turkey’s government has provided an incentive to try to expand durum acres relative to soft wheat and obviously, they’re a big player on the international pasta export market,” he said. “If production comes through, they could be more aggressive there.”

The IGC in February projected carryover stocks on June 30, 2023, at 15-year lows for the United States, Canada and the European Union.

“There are other important players, but these three typically have the most impact on trade,” Peterson said. “Other countries that are short of product, they can go to the US, Canada, EU try to buy. Because of our sub-par production over the past few years, and stable-to-recovering consumption, ending inventories are still going to be at 15-year lows. Supplies are going to be relatively tight. Current price trends won’t reflect that; the market seems pretty comfortable. But keep in mind inventories are not that plentiful.”

World stocks expected to remain tight through 2024 factor in expectations from US Wheat Associates’ European office and the IGC for continued expansion of durum pasta demand. High relative prices in 2022 pressured consumption in some economically constrained markets, Peterson said.

“We’re used to the strength of the US dollar, but if you’re a country trying to find durum and pay for it with dollars, it’s pretty darned expensive,” he said. “Some markets would like to buy more but are constrained by dollar. Energy costs and the ability to finance purchases due to the strong US dollar may still hinder pasta’s rebound and durum demand in some markets, but overall, expect growth in world pasta demand in 2023.”