Durum demand lackluster

Durum demand could be as soggy as a wet spaghetti noodle this year based on good crop conditions in key growing regions.

“We needed a year where there was a pretty good downturn in North Africa,” said Jim Peterson, policy and marketing director with the North Dakota Wheat Commission.

“And at least the early projections from what I’ve seen looks like it’s as big a crop as last year and Algeria may even be slightly better.”

North Africa harvested 5.1 million tonnes of durum last year, a 53 percent increase over the previous year’s drought-reduced crop and 12 percent above the five-year average.

Growing conditions have been good in Morocco, which has received above-average rainfall in the main agricultural areas, according to the European Commission’s crop monitor.

“Winter cereals are reaching maturity under good conditions and remote sensing indicators corroborate a very good winter crop season,” the monitor said in a May 22 report.

Algeria received “abundant” rains in April prior to flowering, improving the yield outlook for winter crops.

It was dry in Tunisia in April but the country received some rain in May. The rain was too late to improve crop prospects in the south but helped those in the north.

The monitor is forecasting that all crops in Algeria and Morocco will have yields above the five-year average, while Tunisia’s crops will be in line with the five-year average.

Peterson said North Africa typically accounts for one-third to one-half of the global trade in durum.

In the last couple of years, it has become an even more important destination for North American durum due to Italy’s controversial new country-of-origin-labeling laws on pasta that have slashed exports to that country.

Europe’s crop monitor also commented on crops in the EU and Turkey. The EU is the world’s largest durum producer and Turkey ranks third behind Canada.

Italy, France and Spain account for the bulk of the EU’s production.

An unusually hot April accelerated crop development in southern Italy, hurting grain formation and filling. Conditions were favourable in the north.

A rainy winter season has France’s cereal crops on track for trend line yields and higher yields are possible depending on weather during flowering.

Soil moisture levels are higher than usual in Spain during the crucial grain-filling stage of crop development. As a result, wheat and barley yields have been revised upwards.

The crop monitor is forecasting average durum yields for the EU of 53 bushels per acre, which is five percent above the five-year average.

Turkey’s winter crops are developing nicely under favourable growing conditions with the exception of non-irrigated fields in the southeast of the country.

“There doesn’t seem to be a lot of big demand opportunities or huge production concerns in key countries,” said Peterson.

That has created a “very sticky market” in North America. New crop harvest prices are lower than the nearby prices, suggesting that buyers are not in “search mode” for durum.

But things can change in a hurry. Harvest begins in June in North Africa and July in the EU. If it rains during harvest there could be quality concerns.

What could have an even bigger impact are the growing conditions on the Canadian Prairies and the U.S. northern plains. Prices could drop if summer rains are plentiful or rise if there is drought.

“It’s one of those years where we’re going to hinge each week on whether we get the rains or not,” said Peterson.

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