Market Update August 2021

Market Update August 2021

PRODUCTION

Globally, durum production is mixed. After initial favourable weather conditions in Canada, extreme heat has now developed into an unprecedented drought in the durum growing regions. This has resulted in a rapid start to harvest, which is helpful in terms of quality and colour, but an indication of low yields. Canada is the number one global durum producer and according to StatCan, this drought has seen production levels fall below average for the last 5 years and almost 30% less than what was forecast this year.

The Northern Plains of the United States is also in the grip of a severe drought with the Desert Durum farmers facing the possibility of water restrictions. Desert crops in Arizona are irrigated and under threat of Tier 1 restrictions which will mean they will lose nearly 18% of the water it has been drawing from the Colorado river. Miller magazine suggests that the US durum crop will fall 50% in 2021.

The EU have conversely had an increase in production of 7% and Mexico an increase of 9%. Heavy rain and floods in France have impacted production reducing it to a “sufficient” level. However, these unseasonal weather events have alarmed French Pasta makers and the UN.A.F.P.A. Union of the Organizations of Manufacturers of Pasta Products in the E.U to call on governments to develop an emergency plan to reduce the risk that climate change poses to the pasta market, of which production and consumption has been steadily growing over time.

North Africa, in particular Morocco, with an increase in rainfall of 32% from the previous year, has tripled production from the previous year. The excellent harvest is historically the second best after 2014/15.

DEMAND/TRADE

Canada is not only the largest global durum producer, but also the worlds largest durum exporter, with grain usually destined for Italy, North Africa, and the US. With heavily reduced supplies in Canada and the US and despite the increased production in the EU and Morocco, it will not be enough to offset declines elsewhere giving Mexico, the EU and Australia an opportunity to expand exports.

Globally Durum prices are strengthening, as key buyers look to sure up stock against an uncertain supply base.

LOCALLY

Durum growing areas in SA and Victoria are continuing to receive timely, plentiful rains with crops developing well. NSW too has enjoyed soaking rains and are optimistic for a bountiful end to the season.