Markets

Australian durum shapes up for price, volume double

Liz Wells, August 30, 2021

A durum trial plot at Gatton in southern Queensland. Photo: Charlotte Rambla, QAAFI

KIND growing conditions to date are boosting the likelihood of Australian durum having its second big export year in a row, and this time into a global market rallying in response to the impact of drought on North America’s export surplus.

Indicative new-crop multi-grade prices delivered to Newcastle, Australia’s major port for durum exports, are now at around $525 per tonne, up from roughly $440/t this time last year.

“This is one of the very rare years where it looks like our yield prospects are solid and we can get the double in with good prices too,” Priag Marketing principal Kevin Schwager said.

“Historically, we don’t get a good line of sight on pricing at this time of year because we’re waiting to see what the Canadian crop is like, but we know it will be small because of all the news emanating from the Prairies, and from the northern United States, about the dry.”

While Australian durum production is so small it did not rate a mention in the USDA’s report on global durum supply and demand issued earlier this month (see Global Perspective below), its quality enables it to sell into the world’s key markets.

They include Italy, which has been the destination for most of Australia’s 350,000t or so shipped since January from the 2020 harvest which yielded around 570,000t.

“Durum grown in northern NSW is some of the best in the world, and it’s one of the places buyers in North Africa and Italy will look to.”

Australian Durum Company is one of Australia’s major durum exporters, and principal Peter Howard said while new-crop prices will be very high, volume will be down because of the smaller crop.

“I think the new-crop exports will be lucky to be 150,000t; we are expecting a much smaller crop,” Mr Howard said.

Italy and Africa are again expected to be the major export destinations for Australian durum, provided it hits its quality parameters and does not suffer a major downgrading if harvest 2021 turns out to be a wet one.

Area ideas mixed

Perspectives about new-crop production are mixed, mainly because the Liverpool Plains and some other pockets of northern NSW got too wet to continue planting all intended durum area.

Mr Schwager said recent rain had underpinned the crop’s yield potential ahead of the harvest which was expected to be in full swing by mid-November.

“That rain…is going to go a long way to finishing the crop; its price and yield prospects look outstanding.”

While the northern NSW durum area might be smaller, yield potential is seen as above average. Mr Schwager estimates new-crop production will be about the same as last year.

Chickpeas and durum typically are the later-planted crops in Australia’s winter-crop planting program, and a late swing into durum in NSW and Queensland was prompted by news of North America’s cruel summer coupled with lacklustre chickpea market prospect in June-July.

Past dry

The unusually dry 2017 NSW growing season saw national production come in at below the 300,000t or so from the bumper 2016 harvest.

In early 2018, the market for ADR1, the top grade of Australian durum, was quoted at around $340/t delivered Newcastle, around two-thirds of today’s new-crop price.

Severe drought in 2018-19 and 2019-20 in northern NSW, where Australia’s durum export surplus is generated, saw only a few thousand tonnes shipped each year.

However, production in South Australia, Victorian and southern NSW ensured Australia’s domestic requirements were covered.

They include roughly 120,000t as used by pasta manufacturer San Remo in South Australia, and 100,000t from consumers in eastern states.

Global perspective

In its World Markets and Trade report released earlier this month, USDA said global durum supplies were expected to be thin this year, with Canadian and US durum exports plummeting to their lowest since 1964-65.

Because of drought, USDA estimates the US durum crop will be down 50pc from last year to 900,000t.

Canada consistently leads not only as the top global durum producer but also the largest exporter.

In 2020-21, Canada exported nearly 6Mt of durum, 90pc of its crop, and its production and exports are expected to fall at least 10pc in the current marketing year because of its drought-affected yields.

CANADIAN EXPORT – by destination Aug 2019 – July 2020 Aug 2020 – July 2021
Algeria 391,600 1,187,800
Italy 1,246,800 1,489,900
Morocco 888,700 1,104,900
Nigeria 131,900 172,900
Peru 124,800 158,300
Tunisia 216,100 338,100
Turkey 978,800 246,500
United States 386,000 273,300
Other destinations 895,500 1,085,900
TOTAL 5,260,200 6,057,600
AUSTRALIAN EXPORT – by destination Aug 2019 – July 2020 Aug 2020 – June 2021*
Italy 0 270,170
Nigeria 0 27,500
Other destinations 4,780 4,205
TOTAL 4,780 301,875

Table 1: Canadian and Australian durum exports since August 2019.  Source: Canadian Grain Commission and Australian Bureau of Statistics. * Australia’s July 2021 durum export figures will be added when released.

The US exported 600,000t in 2020-21, mostly to Europe and North Africa, and its exports are forecast to fall to 400,000t in 2021-22.

EU durum production is forecast to rise 7pc to 7.7Mt in 2021-22, while Mexico’s crop is seen as up 9pc to 1.3Mt.

Combined, the EU and Mexico increases will not be sufficient to offset North America’s decline.

Italy, the world’s top pasta-producing country, continues to demand imported durum to re-export it as pasta, and imported nearly 2Mt of durum from Canada and the US in 2020-21.

Turkey, another major pasta producer, sources nearly half of its imported durum from Canada.

North African countries, meanwhile, consume durum for both semolina milling and pasta production.

Morocco and Algeria primarily source durum from Canada, and their imports are expected to diminish significantly in 2021-22.

In addition, Morocco’s domestic wheat production has nearly tripled from the previous year, easing some of its durum supply issues.

 

 

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  1. Chermati, August 30, 2021

    Durum market is strong this year. Very tough year for pasta/couscous industry.

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