Market Update November 2017

Market Update November 2017

World durum production was at a seven year high in 2016/17, with the major exporters recording high yields, yet generally with a low protein content. This year, world durum production is projected to be 0.9Mt lower than in 2016/17.

A smaller harvest has been recorded in the drought ravaged northern states of America and the volume produced is about half the volume of last year according to the USADA. The disappointing harvest has resulted in a poor level of competitiveness for American Durum and US exports are expected to fall.

In Canada where the harvest is complete, the volume is lower than last year, however quality is much higher with 80% of the grain meeting a premium grade, whereas last year only 20% of the grain achieved these levels. As a result, durum wheat producers will be able to mix high quality 2017 crop grains with the low-quality grains from 2016 to create an overall blend that meets the specifications for export to the world market.

The smaller harvests in Nth America and Europe will be partly offset by a larger harvest in Nth Africa. Favourable weather conditions in 2017, has seen production in Nth Africa increase significantly. The Morocco News reports that according to the Ministry of Agriculture and Maritime Fisheries, the production of cereal like durum wheat, common wheat and barley, is around 60% above average.

Strategie Grains predicts global durum wheat consumption to be down in 2017/18. Demand for durum wheat for human and industrial demand will remain stable, however due to the smaller global harvest and better-quality grain, demand for durum wheat for use in the animal feed sector is expected to reduce.

Globally durum prices are regarded as low and it is expected there will be minimal price movement in the immediate future. It is yet to be seen if Canadian farmers will continue to hold back stock from the market until prices improve or if they sell at a discount to maintain competitiveness with Mexican durum. Farmers in the EU are also hesitant to sell their durum while prices are considered low.

Locally, Victorian durum growers in the Wimmera region are hoping for above average yields after favourable conditions during the growing season. SA is more variable but still on target for a near average outcome. The irrigated areas of Southern NSW are about average however Northern NSW has struggled all season.