Market Update October 2018.

PRODUCTION

World durum production for 2018/19 is estimated to rise 0.4 Mt year on year. Production in the worlds largest durum producing country, Canada, should increase year on year with harvested area up, albeit yields slightly down on last year. Currently however, the harvest in Canada is at a virtual standstill, due to cool wet weather which is forecast to last for another two weeks.

Production in the US should increase by approx. 0.5Mt year on year. Planted acreage is less than last year however yields should recover from those recorded in 2017/18. The USDA reported that durum production was nearly 9% higher than the 5-year average. Harvest in North Dakota (the largest durum wheat producing state in the US) is 97% complete.

North Africa has continued to enjoy favourable spring weather. Production is up in Algeria, Morocco and Tunisia and yields have been exceptional.

In the EU however, durum production in France and Italy is expected to fall in 2018/19. High yields have been recorded in Spain, however this has pushed down the protein content. Strategie Grains has also predicted a fall in production in Russia, Kazakhstan and Turkey.

DEMAND/CONSUMPTION

It is predicted that world durum consumption will remain flat in 2018/19. Higher consumption in the animal feed sector is expected in the EU due to the decline in the production and quality of the grain in France, Italy and Spain.

A small decline in human consumption is also predicted. Consumption will grow in Morocco and Algeria in response to their abundant harvests, but this could be offset by declines in Venezuela (due to economic crisis) and Syria where production has crashed.

TRADE

World Trade is projected to decrease by over 0.5Mt year on year. Due to good harvests, there will be a smaller import requirement by Algeria, USA and Morocco. This will negatively impact Canadian exports, as will the hesitation of Italy to import Canadian durum due to concerns over glyphosate residue content. The result may be a ballooning of carryout stocks in Canada, predicted to be the highest level since 2009/10. Grain Cents reports that Canadian durum exports are currently down 21% year on year. The USA could benefit from this and capture a larger share of demand along with Kazakhstan. Grain Cents reports that US exports so far in the 2018/19 crop year to be up 12% year on year.

LOCALLY

Drought conditions continue to prevail over eastern Australia. Most of the durum growing areas in SA and Western Victoria have also been severely hampered by dry weather conditions as well as severe frosts in the past week. Harvest is still approx. 4 weeks away in SA and Western Victoria, but at this stage durum production in Australia is predicted to fall by 150kt year on year.