European grains analyst Strategie grains forecasts that European durum production will fall by 27 percent in 2005-06.
This confirms an outlook by the Canadian Wheat Board’s Peter Watts reported here in January. He said changes in the EU’s Common Agriculture Policy that shift subsidies from crop-specific payments to general farm income support would cause farmers there to switch to crops that have better market returns.
In its Feb. 17 report, Strategie grains forecasted that seeded area will shrink by 18 percent to 7.67 million acres in the pre-expansion 15-member bloc, with acreage declines greatest in Italy, Greece and Portugal.
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There is little durum produced in the new member states in eastern Europe.
Yields are expected to back off 11 percent from last year’s record, resulting in a total decline of 27 percent to 8.3 million tonnes, from 11.5 million last year.
The durum acreage is expected to shift to soft wheat, barley and oilseeds.
The news was bullish for durum prices, but offsetting it was a report from Tunisia, a durum importer, that it would not require imports for domestic needs.
This also confirms expectations. Most of North Africa, the globe’s key durum importing region, has enjoyed good moisture this year and expects a large domestic crop.
This will mark the third consecutive year that Tunisia will not need to import durum for domestic needs.
However, food companies there are free to import durum for processing and export.
Tunisia’s larger neighbours, Algeria and Morocco, have also enjoyed good precipitation and are not expected to import large quantities of durum.
Getting back to Strategie grains, it expects the EU will not have a repeat in 2005 of last year’s bumper wheat crop. It expects North America will also have a smaller crop, partly offset by larger production in Asia.
It notes that the International Grains Council forecasts 2005-06 global wheat production at 599 million tonnes, 20 million tonnes less than the record production in 2004-05.
Consumption would be in the 607-610 million tonnes range, so the buildup in stocks that occurred in the current crop year might reverse in 2005-06.
However, as we reported last week, the world’s major exporters carry a fairly large percentage of the stocks and that will act as a lid on prices.
