Prices of durum have escaped the setback to values for other wheat thanks to “significant downgrade concerns” in the European Union, the top producer, grain handling giant G3 Global said.
Winnipeg-based G3, the former grain export monopoly for Canada’s Prairies, revealed that it had cut forecasts for prices of most crops delivered to its sales pools thanks to improved production prospects.
“Spring-seeded crops are entering the reproductive phase in very good condition,” G3 said, cutting its pool price forecasts for wheat by Can$7-8 a tonne, and for canola by up to Can$32 a tonne.
“Moisture and temperature conditions across North America have been generally very good for the last month and crops are showing above-trend potential.”
The group forecast that world wheat production this year “is now projected to set a new record” – contrasting with expectations of other commentators.
The US Department of Agriculture, for instance, forecasts world all-wheat output at 730.8m tonnes, a drop of 3.4m tonnes year on year, while the International Grains Council, which updates its estimates later this week, currently sees a fall of 13.3m tonnes to 722.3m tonnes.
‘Significant downgrade concerns’
However, G3 raised by Can$2.00 a tonne, to up to Can$307.00 a tonne, its estimates for prices of durum delivered to its sales pools, raising premiums for the pasta wheat over conventional wheat.
G3 – a joint venture between US agribusiness Bunge giant and Saudi Agricultural and Livestock Investment Co, or Salic – flagged the setback from poor weather to crops in the European Union, which is responsible for roughly one-quarter of world durum output.
“The European durum crop is facing significant downgrade concerns as substantial rains were received leading into harvest, which is just getting underway,” said the grain handler which, in Canada, serves the world’s biggest durum exporting market.
“This has buttressed prices even while conditions in North America have become more promising over the past month.”
French crop deterioration
The comments come as traders continue to grapple with the implications of the inundations which have raised crop concerns in particular in France, the EU’s second-ranked durum producing country after Italy.
On Friday, FranceAgriMer, the official French ag bureau, slashed by 10 points to 58% its estimate of the percentage of the domestic durum crop rated in “good” or “excellent” condition.
A year ago, the figure was 79%.
The proportion of French durum seen in “bad” or “very bad” condition was, at 16%, up 3 points week on week, and four times the figure for a year ago.
Excessive rains near harvest are a particular concern, with moisture encouraging ripe kernels to sprout, reducing their qualities for millers and meaning crop downgrades to lower food grades, or to use just in livestock rations.
World durum outlook
The IGC a month ago forecast world durum production in 2016-17 dropping by 800,000 tonnes to 38.5m tonnes, citing a marginal drop, to 16.1m hectares, in world harvested area of the grain “due to a fall in North Africa”.
The IGC at the time forecast EU output rising by 400,000 tonnes to 8.9m tonnes, citing “mostly good weather for crops”.
The Canadian durum crop was seen rebounding by 800,000 tonnes to 6.2m tonnes.
AAFC, Canada’s farm ministry, has pegged domestic output at 6.1m tonnes, flagging a rise of 5% in seedings “due to relatively high prices in 2015-16, and a significant price premium to hard red spring wheat”.
(Source – http://www.agrimoney.com/news/eu-durum-crop-facing-significant-downgrade-concerns–9691.html)