Market Update November 2021
The final component of the 21-22 season global puzzle is becoming clearer with the impact of the widespread drought in the Canadian Prairies and the US Durum growing regions being realised.
Durum production in Canada, the world’s largest durum producer, shrank by nearly half this year. The North Dakota Wheat Commission also reports that the severe drought in the USA has reduced the annual output in North Dakota to its lowest level since 1961, a decrease of 46%. Drought has also impacted durum production in Russia and Algeria, where production has dropped by 38%.
As production declines, the demand for pasta continues to climb worldwide after the pandemic spurred people to stock their pantries. The Sun newspaper in the UK, has reported that shoppers in the UK have already started to complain that pasta stocks on shelves in Sainsburys and Tesco are low and warns that pasta prices will inevitably increase.
The pressure is primarily on Canadian supplies, the world’s largest durum exporter. Italy is scrambling to stock durum wheat, and it has also been suggested that the US has already exported too much durum and may need to increase imports.
Leftfield Commodity research suggests that a 10% acreage increase is necessary in Canada to bring the durum market back into balance in 21/22.
Australian and Mexican durum is yet to enter the market. Mexico’s crop is up 9% from last year and the Australian crop is on target for a second year of above average production. It is expected that Australian Durum should have its second big export year in a row and may export 150000t. A key positive of a larger crop is the corresponding market liquidity that is created by multiple importers now competing to access grain. We are anticipating engaging with European markets again this year after having been ignored in previous years due to limited Australian supply.
Locally we are gearing up for a traditional harvest “cash price” program, with storage sites at Balaklava and Kulpara primed and ready for receivals as soon as headers start to roll. For all market enquiries, feel free to call Steve Mellington on 0419 867 971.