EU turns to Australian durum on Canadian tightness

  • Market: Agriculture
  • 22/09/21

The EU has turned to Australia for durum wheat supply in the 2021-22 marketing year amid supply tightness in Canada — the world's largest producer of crop.

Australian durum wheat exports to the EU totalled 65,000t in the first 12 weeks of the 2021-22 marketing year — which runs to 19 September — provisional data from the European Commission show. This was up from just 41t over the same time a year earlier.

Deliveries from Australia accounted for 23.1pc of the EU's overall imports so far this marketing season. In comparison, Canada exported 170,100t during the period, considerably below the 485,000t a year earlier, when the country supplied nearly 72pc of the EU's durum needs.

The EU last year imported a record 2.92mn t of durum wheat in the 2020-21 marketing year, up from 2.32mn t a year earlier. This was largely a result of a recovery in pasta production to pre Covid-19 levels — particularly in Italy, the largest importer of crop in the bloc. At the same time, lower domestic output within the EU further increased the call on imports.

Higher demand was mostly met by Canada, which exported a record 2.03mn t to the EU in the past marketing year. The country was able to step up shipments on the year, with its domestic production hitting 6.57mn t in 2020-21, its highest in four years.

But persisting dry and hot weather in North America this summer has heavily weighed on Canada's wheat yields, with government statistical agency StatCan pegging the country's 2021-22 durum wheat output as low as 3.55mn t last week. This also implies Canadian durum exports could nearly halve on the year.

Reduced output this year has boosted durum prices, with Canada's second grade western amber durum (2 CWAD) quoted around $640/t fob Vancouver today, more than doubling on the year.

But Australia's comparatively smaller durum production suggests that the country may not supply the EU's requirements alone, even with high yields. Australian durum exports to the EU previously hit a record 400,000t in 2001-02 and have averaged below 300,000 t/yr since 2012-13. The country was also almost fully displaced from the EU market in 2018-20 when drought conditions hit its wheat production.

This also suggests Italy in particular might need to return to Canada for durum supply later this year and could purchase up to 700,000t from the latter, participants said.

French pasta-maker groups Sifpaf, CFSI, as well as Italy's Unione Italiana Food have warned since last month that European pasta prices could go up this year due to limited and costlier imports.

Canadian durum exports to EU mn t

Sharelinkedin-sharetwitter-sharefacebook-shareemail-share

Related news posts

Argus illuminates the markets by putting a lens on the areas that matter most to you. The market news and commentary we publish reveals vital insights that enable you to make stronger, well-informed decisions. Explore a selection of news stories related to this one.

News
26/03/24

Baltimore bridge collapse forces freight changes

Baltimore bridge collapse forces freight changes

Washington, 26 March (Argus) — Vessel traffic in and out of the Port of Baltimore, Maryland, has been suspended indefinitely in the wake of a container ship collision early today that brought down the Francis Scott Key Bridge, an accident that will force the rerouting of coal, car and light truck shipments. The prolonged closure of one of the largest ports on the US east coast could have a ripple effect on trade flows across much of the US, as shippers grapple for alternatives in the absence of a certain reopening timeline. Search and rescue efforts are still ongoing in the Patapsco River, after the 116,851dwt Dali headed to Colombo, Sri Lanka, slammed into a bridge support. The crew had lost control of the vessel. The Dali is owned by Grace Ocean and managed by Synergy Marine Group. The Maryland Port Administration said it does not know how long it will take for the shipping channel to be cleared and for traffic to resume. Shipping companies are bracing for a closure of at least two weeks, but many expect the clean-up effort could take significantly longer. President Joe Biden vowed the federal government will provide whatever resources are needed to get the port "up and running again as soon as possible." The port is a major trade hub for steam and coking coal, automobiles and scrap metal. Many market sources are still trying to determine whether the disruption will be dramatic enough to move prices. But coal markets were already being affected today. Baltimore is home to two key coal export terminals: eastern US railroad CSX's Curtis Bay Coal Piers and coal producer Consol Energy's Consol Marine Terminal. The facilities are upstream of the bridge, meaning ships will not be able to serve them until the route reopens. The terminals handle thermal and coking coal from Northern and Central Appalachia. They have a combined export capacity of 34mn short tons (30.8mn metric tonnes). The two terminals loaded 2.4mn t of coal in February, up from 2.1mn t a year earlier, according to analytics firm Kpler, mostly exports to India and China. An India-based trader said that the suspension of coal exports will probably raise prices in India, as brick kilns enter the peak production season in the summer. Buyers could look to petroleum coke as a substitute, but the higher sulphur content may not be appealing to some users despite the higher calorific value. Prices for deliveries to northern Europe are also likely to rise given that the Netherlands, Germany and Belgium combined are the second-largest market for North Appalachian coal. April API 2 futures rose by $2/t to $113.30/t. The incident has added a "level of volatility [which] could have big implications," a European paper broker said. The lack of information has prompted some coal producers to hold off on activating force majeure clauses in their contracts. Curtis Bay is served only by CSX, while CSX and fellow eastern carrier Norfolk Southern serve Consol. CSX said it is in contact with existing coal customers and contingency plans are being implemented. The railroad at this point intends to keep Curtis Bay open but will continue to assess the circumstances moving forward. Norfolk Southern did not respond to questions. Some scheduled Baltimore coal exports may be redirected to the other three eastern US coal export terminals in Hampton Roads, Virginia, but such reroutings likely will entail increased costs. Not all coal mines will be able to shift terminals. Such decisions will depend on available capacity in Hampton Roads. Exports from the three terminals in January reached a five-year high , signaling somewhat limited capacity. Mine location and railroad access may also determine whether coal can be rerouted, an industry source said. But some producers do not have much of a choice about trying to send coal to Hampton Roads. They may need the cash so will be forced into a decision. The producers most vulnerable to delays may be Consol and Arch Resources. Arch's Leer coking coal mine may be in the best position because it co-owns Dominion Terminal Associates in Hampton Roads with Alpha Metallurgical Coal Resources. The sudden lack of export capacity could put a floor under US coal prices, which have mostly been falling since last year amid low domestic demand. The competition to replace Baltimore coal exports could prevent further cuts, another coal trading source said. Metals sources say the accident will have only isolated effects on the global ferrous scrap market, but many market participants are still assessing the situation. The port is the 10th largest ferrous scrap export port in the US, and over the last five years an average of 44,000 metric tonnes/month of ferrous scrap was exported from Baltimore, according to US Department of Commerce data. But the port closure is likely to affect other freight. Baltimore is the nation's top handler of automobile traffic. Motor vehicles and parts accounted for about 42pc of all Baltimore port imports and 27pc of all exports, according to state data. The Port of Baltimore handled 847,158 cars and light trucks in 2023. "It's too early to say what impact this incident will have on the auto business — but there will certainly be a disruption," said John Bozzella, chief executive of industry trade group Alliance for Automotive Innovation. Dry bulk freight rates likely unaffected Several sources told Argus Baltimore's closure is unlikely to have a major impact on dry freight rates despite short-term interruptions to coal transports. "We are in the shoulder months with less demand for thermal coal," a shipbroker said, suggesting mild global temperatures means the collapse "may not have too much of an impact" on freight markets overall. Vessel traffic in ports such as Charleston, South Carolina, and Savannah, Georgia, may increase on diversions from Baltimore. Kpler identified 17 vessels that will likely be impacted because they are either in the Port of Baltimore or were expected to load there in the coming days. By Abby Caplan, Gabriel Squitieri, Luis Gronda, Evan Millard and Brad MacAulay Port of Baltimore coal terminals Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Read more
News

Germany sees no return to easy EU climate decisions


26/03/24
News
26/03/24

Germany sees no return to easy EU climate decisions

Brussels, 26 March (Argus) — German environment minister and green party politician Steffi Lemke has warned that easy decision-making processes for climate change and environment policies in the EU are unlikely to return after the election in June. This comes after a key EU vote on a provisional deal for climate, nature and environment was withdrawn because of a lack of member state support. Global challenges and geopolitic "are all too profound" to go back to what the EU decision-making process was like five years ago, Lemke said. But she noted that ultimately depends on the EU elections results in June and "how far extreme and populist parties gain majorities". This comes as the adoption the nature restoration law was cancelled yesterday after a number of countries, including Hungary, withdrew their support. Lemke said the vote was supposed to be "a formality" but that it is now unclear whether the law can still pass in this legislative period. The European Parliament had previously approved the nature restoration law, agreed with EU states, that commits EU countries to restoring at least 30pc of habitats in poor condition by 2030, 60pc by 2040, and 90pc by 2050. Lemke said that not adopting the nature restoration law would leave the EU more exposed to climate change. "We'll not be able to manage climate risks without nature in order," she said. Unstable ecosystems exacerbate the problems faced because of climate change, for the economy, infrastructure, human health, she said. "It's also about protecting agriculture from climate change". "US insurers are withdrawing from different regions because they can't insure climate risks anymore". "We shouldn't make the mistake of scoring easy points against climate and environmental protection," she added. "Climate-friendly states will try to get [the law] up for adoption at a later date," she added. When asked whether Germany has some responsibility for encouraging others to block provisional agreements on EU laws, she said that the country has not always been an "easy negotiation partner". But Lemke pointed out that Germany had finally approved many important laws, most recently the packaging and packaging waste regulation . The phase-out of the internal combustion engine had been particularly difficult for the German government. Other member states have also encountered major difficulties in securing government approval or parliamentary support, she said, pointing again the geopolitical situation after Russia's attack on Ukraine. Many countries have seen populist parties and right-wing extremist parties fueling uncertainty, and have had to contend with the impact of the Covid-19 pandemic and global inflation. "This had made democratic governance significantly more difficult in the member states themselves, but also in Europe," she said. By Dafydd ab Iago Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

News

Ukraine forecasts spring grain areas down, oilseeds up


25/03/24
News
25/03/24

Ukraine forecasts spring grain areas down, oilseeds up

Kyiv, 25 March (Argus) — Ukraine's expected spring grain areas in the 2024-25 marketing year may fall, while oilseed acreages may rise, according to preliminary forecasts from the country's agriculture ministry. Grain Ukraine spring grain and pulses acreages may fall to 5.6mn hectares (ha), down from 5.72mn ha in the previous year, according to the latest report of spring crop planting progress. This contains the ministry's first preliminary forecasts of spring crop acreages. Ukraine's corn planting areas for the 2024-25 marketing year are now projected at 3.91mn ha, down from 4.04mn ha a year ago. The spring barley acreage in Ukraine can also be cut to 818,000ha, lower than last year's level of 869,500ha. Meanwhile, the ministry expects an increase in the spring wheat acreages to 246,000ha, up from 191,000ha in the previous year. Oilseeds In contrast, spring oilseed acreage is forecast to increase to 7.54mn ha, up from 7.1mn ha a year ago, as oilseeds remain more profitable crops than grains. Sunflower seed planting areas is projected to rise to 5.29mn ha, compared with about 5.03mn ha in the 2023-24 marketing season. Farmers also may increase soybean planting acreages to almost 2mn ha, up from 1.81mn ha a year ago. Spring crop planting progress Ukrainian farmers seeded about 214,500ha with early spring crops — wheat, barley and peas — as of 21 March, up from 128,100ha a week earlier, agricultural ministry data show. Ukrainian farmers planted 47,700ha of spring barley in the week to 21 March, with the overall seeded area of the product reaching 117,300ha, about 14.3pc of the total national projected areas. Ukraine's spring wheat planting advanced by 16,100ha in the week, to 29,000ha. This was about 11.8pc of the projected area for the 2024-25 marketing season. By Alexey Yeromin Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

News

Canada wheat export pace keeps up


22/03/24
News
22/03/24

Canada wheat export pace keeps up

London, 22 March (Argus) — Canada's wheat exports for the 2023-24 marketing year (July-June) have outpaced the previous five years' rates, according to Statistics Canada. Canada exported 515,100t of wheat in the week to 17 March, pushing the country's exports of the product to 13.54mn t so far this marketing year, some 3.17mn t higher than the previous five-year average. Canada's wheat export pace has been supported in part by firming demand from Japan, according to the US Department of Agriculture's Foreign Agricultural Service (USDA FAS). The US and Canada both supply hard wheat for bread production to Japan, but more competitive wheat prices and transport rates have attracted Japan's agriculture, forestry and fisheries ministry (MAFF) to Canadian over US-origin product, according to the FAS. Canada has overtaken the US as the leading origin of food, seed and industrial (FSI) use wheat purchased by MAFF in the first seven months of the marketing year, data from FAS Tokyo show. Imports of Canadian FSI wheat to Japan in July-January increased by 12.1pc on the year to 1.16mn t, more than offsetting an 11.5pc decrease in imports from the US, which amounted to 1.01mn t, the FAS report said. By Megan Evans Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

News

Brazil's 2024 grain, ferts freights unusually low


22/03/24
News
22/03/24

Brazil's 2024 grain, ferts freights unusually low

Sao Paulo, 22 March (Argus) — The slow pace of farmer selling for Brazil's 2023-24 soybean crop and lower liquidity in the fertilizer market have contributed to lower demand for transport services in early 2024, also raising concerns about a possible logistical bottleneck. Demand to transport grains in Brazil usually peaks in the first quarter — increasing freight rates — because of the soybean crop harvest. Works in the current cycle have proceeded at a satisfactory pace, despite climatic problems brought by the El Nino weather phenomenon. The harvest in Mato Grosso state — Brazil's largest oilseed producer — reached 95.6pc of planted areas by the week ended 15 March, only 0.9 of a percentage point below the previous harvest and 0.6 of a percentage point below the five-year average for the period, according to the state's institute of agricultural economy Imea. But crop sales have been slow. Farmers in Mato Grosso sold 46.3pc of the 2023-24 soybean crop by early March, 5.9 percentage points less than in the previous crop and 19 points behind the five-year average for the period, according to Imea. Lower oilseed prices in the international market have encouraged producers to slow the pace of sales. As a result, grain freight rates during harvest time fell — which is unusual for this time of year — on lower demand for transportation services. Freight rates on the Sorriso-Rondonopolis route, bound for the rail terminal in Rondonopolis, reached R153/metric tonne ($31/t) in the first week of March, from R200/t in the same period in 2023. In the corridors towards Miritituba, in Para state, via the BR-163 highway to the waterway transshipment point, the Sorriso-Miritituba route was at R253/t in early March, from R315/t last year. The Querencia-Palmeirante route, to Tocantins state and then via rail to the port of Itaqui in Maranhao state, reached R260/t in early March, from R335/t last year. The Rondonopolis-Paranagua route, bound south, was at R338/t in the beginning of March, down from R390/t in the same period in 2023. Demand for fertilizer freights was also unusually lower in the first quarter. At this time of year, farmers typically receive large volumes of fertilizers to attend to their soybean harvest and corn planting activities. But the purchase of inputs was also delayed as farmers postponed crop sales. With lower liquidity in the nutrient market, demand for transportation services was also lower. In Paranagua, freight rates to Rondonopolis reached R234/t in early March, from R276/t in 2023. Freight costs to Sorriso stood at R318/t, from R348/t in 2023. Freight demand for routes originating in the Santos and Cubatao ports, in Sao Paulo state, and bound to Mato Grosso, was also lower. Freight rates to Sorriso reached R365/t in March, from R385/t a year earlier. Costs to Rondonopolis stood at R255/t in the period, from R280/t a year prior. In the Northern Arc, trends on routes from Sao Luis, at Itaqui, were similar. The Sao Luis-Querencia route reached R260/t, from R336/t in the same period in 2023. The Sao Luis-Porto Nacional stretch stood at R202/t, from R249/t last year. This scenario concerns market participants, as it could create a logistical bottleneck. Soybeans will need to be shipped for exports eventually. In parallel, fertilizers arriving in Brazilian ports will have to be delivered to the domestic market. That could lead to increased competition for trucks and a significant increase in freight rates, as well as longer queues at ports for loading and unloading ships, raising the logistics costs. By João Petrini Grain freight rates - Rondonopolis-Paranagua R/t Fertilizer freight rate - Sao Luis-Porto Nacional R/t Fertilizer freight rate - Paranagua-Rondonopolis R/t Grain freight rates - Sinop-Miritituba R/t Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Business intelligence reports

Get concise, trustworthy and unbiased analysis of the latest trends and developments in oil and energy markets. These reports are specially created for decision makers who don’t have time to track markets day-by-day, minute-by-minute.

Learn more