We were asked by a subscriber about what is happening with the durum market. The durum market is relatively small in Australia, which makes it somewhat difficult to get a handle on solid time-series data, as large volumes are purchased on hectare contracts, for example to pasta manufacturers.
The durum market is in disarray at the moment. Canada, the worlds largest producer and exporter is reeling from the recent drought conditions. I have written about the risk to a number of commodities at risk of higher pricing due to Canadian woes (here, here) – durum is one of those.
While Australia is only a small producer of durum, we are well set to participate in the global market, and with the absence of Canada, that is showing in our pricing.
The first chart below shows the scale of the rise in pricing of durum in Canada. As we can see, their pricing levels have risen very steeply, to hit the highest levels since at least 2013.0
In the second chart below, the Durum and APW1 price is shown as an average for October going back to 2015. We can see that the premium has grown dramatically this year.
Durum growers might be onto something. In Newcastle, durum has an average above A$400/mt on four years, whilst APW1 has averaged over A$400 only twice.
Pasta might get pricier this year!