Production problems boost durum demand

Morocco is expected to import six million tonnes of wheat and durum in 2020-21, up from 3.7 million tonnes in 2018-19

North America’s durum crop is getting bigger but so is international demand for the commodity.

The U.S. Department of Agriculture is forecasting 1.5 million acres of U.S. durum, up from its March estimate of 1.29 million acres.

Statistics Canada’s June estimate is 5.69 million acres of Canadian durum, up from its March planting intentions forecast of 5.23 million acres.

That is a combined 10 percent increase in North American plantings. Fortunately, it appears as though there is going to be a good home for all of that pasta-making grain in overseas markets.

The USDA is forecasting a disappointing 750,000 tonnes of durum production in Morocco. The country’s overall wheat crop is expected to fall 60 percent below the 10-year average.

MarketsFarm analyst Bruce Burnett said that bodes well for Canadian exports in 2020-21.

“The good news is they are usually importing high quality when they do import durum, so that’s a positive for North American durum,” he said.

This is the second straight year of crop failure for the North African country.

The USDA is forecasting Morocco will import six million tonnes of wheat and durum in 2020-21, up from 5.1 million tonnes this year and 3.7 million tonnes in 2018-19.

Morocco has been the third biggest buyer of Canadian durum in 2019-20, purchasing 739,500 tonnes of the crop through the first 10 months of the campaign, according to the Canadian Grain Commission. Turkey and Italy are the only countries that have imported more.

Burnett said eastern Algeria is in the same boat as Morocco.

“It just got decimated,” he said.

But only 10 to 15 percent of the durum crop is grown in the east. Conditions were better in western Algeria. Algeria has been Canada’s fourth largest customer, importing 333,300 tonnes of the crop.

The weather has been dry in Tunisia but not as bad as Morocco. Burnett expects production to be below normal in that North African country as well.

Jim Peterson, policy and marketing director with the North Dakota Wheat Commission, said the International Grains Council is forecasting an additional 800,000 tonnes of durum demand out of Morocco and Algeria.

That will more than offset the estimated 500,000 tonnes of extra North American production caused by the increase in acres.

“When they’re buying it’s definitely a positive for the market,” he said.

However, he noted that durum production in Turkey is expected to rebound in a big way, which will seriously curtail demand in that country. Turkey has been Canada’s top customer in 2019-20.

Peterson said the U.S. crop was in trouble until it received recent rain. Only about half of North Dakota’s crop was rated good to excellent in the latest crop condition report.

But rains of 25 to 100 millimetres have stabilized the crop in many parts of the state.

Burnett said most of the durum crop in the entire Mediterranean basin is in rough shape, with the exception of Turkey.

Spain experienced similar growing conditions as Morocco while Italy’s growing season mirrored that of eastern Algeria and Tunisia.

“There’s going to be strong demand from that part of the world,” he said.

That is why he expects durum prices to remain strong, despite the extra 640,000 acres that statisticians found in North America. Durum prices increased sharply in April and have stayed high.

There could be a post-harvest price dip depending on North American production and quality but he doesn’t think it will last too long or be too “troublesome” due to the prospects for good overseas demand.

Peterson shares that sentiment.

“I think durum has got some positives ahead of it,” he said.

About the author

Markets at a glance

explore

Stories from our other publications