Market Update December 2018.


World durum production in 2018/19 is projected to be the second highest recorded in the last ten years, behind the record set in 2016/17. Favourable weather conditions resulted in very high production being recorded in North Africa, particularly in Algeria and Morocco. USA and Canada reported a significant recovery in durum production in comparison to the underperformance of 2017/18. Production, however, decreased year on year in Europe (particularly in France and Italy with mediocre grain quality and protein levels) and Mexico. Production in Turkey and Australia is expected to be down with both countries suffering from dry conditions.


Strategie Grains cites a quasi-stagnation for global durum demand this season. World trade is lacking vigour with weak demand on the part of the importing countries, North Africa and the EU. This situation weighs heavily on prices.


The main exporting countries will close the marketing year with large surpluses which reflect the heavy world durum wheat market. Carryout stock in Canada is reported to be the highest since 2009/10 and the USA at a never been seen level and the EU level still large. Stocks held in Mexico remain balanced and locally Australia will be tight.

The only thing that may push up durum prices is the expected reduction to durum wheat production in 2019/20. The current spread between durum and soft wheat prices in Nth Africa has seen a contraction of the growing area, with declines in the growing area also reported in the EU. Production in Canada is expected to be reduced by 25% and reduced by 10% in USA. These reductions, however, would still leave ample stocks at the end of 2019/20 thus hindering price growth.


Locally durum growers in South Australia have been frustrated with fluctuating weather conditions. Many growers in the Mid North of SA have reported some damage from drought, frost or hail, or all three. In Victoria, it is a mixed bag, with farmers in the Mallee region suffering drought, but West Wimmera growers having an average year. Southern NSW growers are yet to gain any momentum with harvest.