Market Update August 2018.

PRODUCTION

World durum production for 2018/19 should remain stable year on year. Despite predicted falls in production in Canada, Southern France, Italy, Mexico and Turkey, production in the USA and Northern Africa is predicted to be up year on year.

The growing area in Canada has risen slightly this year, however, drought continues to reign in the Saskatchewan area and this suggests that yields will be lower than trend. Drought is also affecting crops in Turkey.

In the EU, harvests are well advanced. Excessive spring rainfall is affecting crop yields and quality in France and Italy, with the Italian yield projected to be below the three-year average. Grain quality in Greece has been reported as mediocre and a reduced growing area in Spain has been compensated by high yields but this means the protein content is low.

Durum production in the USA should be up on the drought hit 2017 harvest. Planted area fell, however, with very good growing conditions, yield should be slightly above trend. Production in Mexico is down due to a smaller planted area.

In North Africa, a dry start to the season saw the planted area reduce however good spring growing conditions means that excellent yields will offset this reduction in planted area.

DEMAND/CONSUMPTION

Global durum consumption is expected to remain stable year on year. Human/industrial demand will remain stable, however, durum wheat use in animal feeds will increase in Europe and Canada because of drought affected poor quality grain in these areas.

TRADE

Startegie Grains forecasts that world durum wheat trade will be -0.2MT year on year.

North Africa will need to import less on the back of this seasons good harvest. Turkish imports are expected to increase to compensate for relatively low stocks and a smaller 2018 harvest. USA will reduce imports from Canada, compared to the high levels imported last year. This is due to significant wheat production this season and the competitive price of domestic durum compared to the price of Canadian durum. The fall in Canadian exports to the USA should be counterbalanced by a high demand for Canadian durum from the EU, Morocco and Algeria as French durum will find itself badly handicapped in these markets due to qualitative and availability issues.

Locally, SA crops are progressing as well as can be expected given the deficiency of rainfall. Durum growing regions in Victoria are faring a little better, but dryland areas in Southern NSW continue to struggle.