Market Update May 2020

PRODUCTION

It is forecast that world durum production in 20/21 will increase slightly. This is coming off the lowest global production in five years in 2019/20.

Production in the USA will increase by 12% year on year. This reflects the attractiveness of durum wheat prices compared with hard spring wheat at planting time.

The prediction for Canada is an increase in acreage sown to durum, however, sowing has been delayed because of the late arrival of spring and the last of the winter crops still being harvested.

In the EU, Spain and Greece appear to be the only countries where production will be higher. Elsewhere, production is expected to fall. Production has fallen sharply in Italy. Adverse weather conditions at planting time has meant crops struggled to recover from then. France had a very wet start, making it difficult to get the grain in the ground, this was followed up with a dry season and above average temperatures. Conditions in Germany were similar, with a wet growing season and then the prevalence of dry weather.

In North Africa, production too, is estimated to be down. Morocco, Tunisia, and the Western side of Algeria have all experienced very dry conditions during the growing cycle. It was also dry at the time of planting which resulted in a smaller area being sown to durum.

DEMAND/TRADE

Demand in the human sector is expected to fall compared to 2019/20, dropping to average values. The impact of the pandemic on pasta and semolina consumption, however, is unknown. Pasta and semolina products are viewed as basics essentials, so demand is not expected to fall. However, absence of tourism may affect pasta consumption outside the family home and lower household incomes may lead to consumers purchasing lower quality, cheaper pasta. It may also result in the higher use of cheaper, softer wheat in blends for pasta.

Use of durum in the animal feed sector is expected to fall, given supply will be short. This will, of course, be dependent on the quality of the grain harvested in 20/21. 

STOCKS

On the world market, Strategie Grains has forecast projected world carryout stock is predicted to fall. Carryout stocks held by the main exporters are projected at their lowest possible level and carryout stocks in the EU has decreased, meaning the 20/21 campaign will begin on a very tight note with prices expected to rise globally.

Nevertheless, the range of potential outcomes is still wide, subject to actual sown acreage in North America, weather conditions across the globe and demand in the context of the global economic crisis.

LOCALLY

Most areas in the durum growing areas of Victoria, SA and NSW have received exceptional opening rains. Cropping is well underway and hopes are high for continued rainfall during the season, resulting in yields returning to more normal levels after two difficult years.