Durum prices trend higher thanks to Middle East

Nations in the Middle East and North Africa have long been the leaders in importing durum wheat, and despite the political unrest in many countries in the area, imports have not slowed down.

Bruce Burnett, director of market analysis with the Canadian Wheat Board in Winnipeg, said the upheaval in the area has caused some nations to bulk up on supplies, in fear they may need supplies should protests to move to their country.

“What some of the countries in the area did — the biggest example would be Algeria — is as soon as the events started happening in Tunisia, they went out and bought a significant amount of grain the coming weeks to ensure they had some good supply,” Burnett said. “Even amongst the upheaval, the countries that normally import wheat are continuing to import.

“Some countries are buying a bit more because of that. It’s really only been an increase in countries saying that they will carry more stocks.”

While the political protests have sent durum prices higher, the unrest could also have a negative effect on values, depending on how much the situation escalates.

“The political unrest does have an impact on the nation’s ability to import if the situation is that bad,” Burnett said. “But for the most part, the countries need the imports, so the imports will happen.”

Burnett said the steady demand from North Africa has brought lower already tight supplies in North America.

“We had a below-average crop in North America last year, and we are starting to see the poor harvest come into play now, and supplies will be tight in the future,” he said.

Burnett said if there is not an increase in acreage and production this year, durum supplies could get extremely slim.

“We could see an increase in acres, but not a huge amplification, because of the poor soil conditions, and also strong prices from other commodities coming at us,” he said.

Daily durum prices quoted by the Canadian Wheat Board have increased by about $50 per tonne over the past month, with the actual values dependent on quality.

The CWB’s updated pool return outlook (PRO) for 2010-11 will be released Thursday, to be followed Feb. 28 by the board’s first PRO for 2011-12.

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