Market Update March 2021

PRODUCTION

The 2020/21 marketing year saw the global production of durum increase from the previous year thanks to large harvests being recorded in Canada, Syria, Turkey, USA, Kazahstan and Australia. The 2020 durum harvest in Australia has been the largest durum harvest since 2016. The crop was especially large in NSW where production was more than twice the five-year average.

World production in 21/22 is again expected to increase. Growing conditions in the EU have been favourable and large increases in production are expected in France, Greece, and Italy. The high prices of 20/21 and incentives, such as sectoral contract agreements for 100% Italian pasta, have encouraged Italian growers to expand their durum growing area.

In contrast, production in North Africa is expected to decline after untimely and unreliable rainfall. Syria is also experiencing poor growing conditions.  A dry winter and the effects of La Nina are concerning in North America, with spring planting in Canada and the USA relying on water reserves, good rains will be needed very soon.

DEMAND/TRADE

Demand for durum use in human consumption is expected to decline this year. After the surge in demand for semolina and pasta created by the global pandemic, demand in 21/22 will drop back to average levels. Durum wheat consumption in the animal feeds sector is also forecast as average.

WORLD STOCKS

Strategie Grains predicts that world stocks at the end of the 21/22 season to be at a low level, lower than 19/20 but greater than 20/21. Predicted increases in production in Canada, EU, Russia, Turkey, and Mexico will be offset by reductions in Nth Africa, Australia, and Syria. The world market will therefore be less tight than in 20/21 with supply and demand in equilibrium. This outlook, combined with lower import requirements in the EU and Morocco (thanks to increased domestic supplies), rising export capacity (with the reopening of the Great Lakes shipping route, closed since late January for routine maintenance), falling soft wheat prices, the expectation of a large harvest in Mexico, Europe and Morocco and the lower demand for pasta ( with the accelerating vaccine rollout), have all resulted in a decrease in the durum price in the recent weeks. This downward price trend is expected to continue in the less constricted world market.

LOCALLY

The durum growing areas in NSW are off to flying start to the 21/22 season, with seeding still 4-6 weeks away. Recent rainfall has provided the dryland areas with plentiful rain and irrigated areas will benefit from an increase in water availability coupled with an anticipated favourable water price. Durum growing areas in SA and Victoria are still optimistically awaiting the opening rains.