Apr 08, 2007 - 08:48:51 CDT
Supplies of durum wheat in the nation's top-producing state are at their lowest early spring level on record. The booming demand for corn by the nation's ethanol industry might cut into the country's durum supply even more, officials say.Durum is used to make pasta. In North Dakota, which grows about two-thirds of the U.S. crop each year, durum stocks - supplies held in farm bins and grain elevators - were at their lowest March 1 level since record keeping began in 1970, the federal Agriculture Department said. Nationwide, durum stocks are almost half what they were a year ago.
Larry Neubauer, who farms near Bottineau in north central North Dakota, does not think this year's durum crop will do much to replenish the domestic supply, despite government predictions that acreage will increase.
"Since that report came out, the durum market has actually dropped anywhere from 20 to 40 cents" a bushel, he said. "With the market dropping, farmers aren't going to seed it. I question if the durum acres will be up at all this year."
The wheat and corn markets are intertwined in more ways than one, said Jim Peterson, marketing director for the North Dakota Wheat Commission. Many farmers plan to seed corn instead of wheat because corn - the main ingredient in ethanol - is more profitable right now. Both crops also are used for livestock feed.
"Corn and wheat are linked not only on acres competition ... (but) when corn prices drop, wheat prices are going to drop in sympathy with it," Peterson said.
Corn prices dropped after USDA's prediction late last month that this year's crop will be the largest in more than half a century. Wheat prices also dropped, and Neubauer said he believes that will lower the projection that durum acres this year will be up 6 percent nationwide and up 8 percent in North Dakota.
"I think they're going to find out that's not going to happen if the market continues to drop off," Neubauer said. "I don't know of anyone who quit raising durum who plans to raise it again."
Farmers have had reasons not to seed durum in recent years. It is much more susceptible than other wheat varieties to scab disease, linked to wet weather. Drought in other areas also has affected quality or outright ruined crops.
Recent strong prices for durum are "kind of fictitious," Neubauer said. "That's for top-milling durum, and we haven't been able in general to raise top-milling durum.
"Over time people have been reducing their inventory (of durum) and not seeding it," he said.
Neubauer said he has cut back his own durum acreage about 25 percent in recent years.
U.S. durum stocks last month stood at 38.7 million bushels, compared with 88.6 million in March 1999. In North Dakota, the drop in that time span was from 58.3 million bushels to 20.5 million.
The drop in stocks has dovetailed with a decrease in production. The nationwide drop was dramatic last year: down from 101 million bushels in 2005 to 53 million.
Jim Bair, vice president of the North American Millers' Association, said U.S. durum production does not meet demand in a normal year. Total durum use, including exports, is 135 million bushels per year, he said, and average U.S. production over the past decade has been a little under 100 million bushels.
"The U.S. durum crop is insufficient even if every bushel is milling quality," Bair said. "In some years, only one-half of the crop is milling quality." That means millers have to look to other sources such as Canada.
The milling industry in general is worried about the long-term prospects for wheat production, including spring and winter wheats that are used in baking, Bair said. That's despite projections of a slight increase this year in overall wheat acreage and a production increase that would replenish drought-depleted carry-over supplies.
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