Seasonal Durum Market Movement:

“Strong vs. Weak” Price Patterns

These two charts illustrate the yearly seasonal average price pattern of durum in recent years when the market was strong, and when it was weak.

The seasonal index that I created was based on the Mpls #1 cash durum
monthly average price for a crop marketing year that runs from July through June.  Other sources may create a seasonal index in different ways. 

An index is created by comparing each month’s average price to the yearly seasonal average price, and showing the relationship as a percent.  All of these percents are averaged to create the index or the “average” shown on the charts.

A major reason for creating an index is so that price relationships can be looked at without the distortions caused by price, i.e. one year durum prices average $3.50/bu. and the next year it averages $6.00 per bushel, but both years have the same seasonal price movement.

The charts show each year selected, as well as the average of each month
for all the years.  I also show a standard deviation of  +1 and -1 for each month that captures the general range of possible price variability, without altering the index. Thus in “Years when the Market was Weak” the average November price is 107% of  the seasonal average.  The standard deviation would allow a range from 103% to 110% of the seasonal price.  We can see, though, that in the 99-00 marketing year, the November price was actually 112% of that season’s price.

“Years when Markets were Weak” were years when the price of #1 Mpls Cash
durum was going lower throughout the season, or generally moving
sideways in a very low price range.  Strong years were just the opposite.  The 02-03 price year is not included here, but probably would qualify as a “Strong Market” year.

In years when prices were strong, the range of prices can be quite variable.   This is demonstrated by the width of the channel of +1/-1 standard deviation.  In strong years, there is still room for prices to work higher, although the price in November tends to capture most of the highest price in durum even in
these years.

In weak years, we see a high amount of variability in the harvest time frame leading up to November.  But then prices in these years very consistently slide into June.

Overby farms near Wolford, N.D., and operates a marketing consulting business as Farm Profit Center. He may be contacted by phone 701-656-3654 or email: pdoverby@utma.com

Durum Marketing Year Seasonal Index
Years When Market Was Strong

Durum Marketing Year Seasonal Index
Years When Market Was Weak