Terre-net: How would you describe the European durum wheat market for the 2023/24 marketing year?
Sébastien Poncelet: In the previous campaign, we had a small production of durum wheat in Europe: only 7 Mt, that is to say one of the smallest historical productions.
However, prices were under strong downward influence because we almost made a record number of imports, with imports coming from newcomers on the international scene: Turkey and Russia.
Their arrival on the export market, notably to Italy, made it possible to fill the European deficit and to adequately supply the world market, while we had a small harvest in Europe and Canada.
What is the situation for the 2024/25 campaign?
In this campaign, things are changing. It's still just as bad in Europe in terms of production, apart from Spain which is picking up a bit: French production is deplorableit is also very low in Italy. We will struggle to have 7 Mt.
But it doesn't happen at all in the same way on the international scene. These emerging exporters, Turkey and Russia, are both absent for the moment in the current campaign.
Russia, which mainly exported low-quality durum wheat to Italy for blending, can no longer do so because the European Union has banned imports of Russian cereals since July 1. Russia has difficulty placing its durum wheat elsewhere, and we do not notice a notable presence of Russian durum wheat on the international scene.
At the same time, Turkey has favored self-consumption since the start of the campaign. She set up protectionist measures to raise prices on its domestic market and help Turkish farmers, by curbing imports of wheat (soft and hard).
The world market is currently not attractive for Turkish exporters, so durum wheat is not leaving Turkey.
Could the return of Canada counterbalance the absence of Russia and Turkey on the world market?
Canada, the world's leading exporter, is returning with a good harvest, around 6 Mt. This is much more than last year's 4 Mt. But Canada is a bit alone in exporting. Durum wheat prices remain fairly well held in Canada, in the sense that the country has a good harvest but not too much competition.
We once again need record imports into Europe. The European situation being much more tense than the global situation, prices remain much higher in Europe than on the world market, to attract this record of imports. We are “expensive” enough to be at a premium compared to the world market and compared to soft wheat, so our prices do not rise.
But our prices are not falling either, because imports are currently only coming in from Canada at a moderate pace and the European balance sheet deficit struggling to fill up quickly.
So we are in a status quo: nothing is happening on the durum wheat market. The forces present are truly blocked and everything is neutralized. Prices don't change for weeks, and may not move until the end of the campaign.
Durum wheat is really a small market, very opaque, very complicated to read, with few actors. With in France, a very specific market.
That's to say ?
We have many low quality batches of durum wheat, there are lots of downgrades and the market is done on a case by case basis. We have nominal prices which are displayed at the port, but this nominal quotation represents a commodity which does not exist: durum wheat up to standards is almost non-existent.
The nominal reference quotation is around 300-305 €/tall lots are made on the basis of discounts compared to this good quality reference which does not exist as such.
There are therefore as many prices for durum wheat in France as there are batches of different quality.
Do you think that French durum wheat could regain a place in exports?
The first question is perhaps “will we have enough durum wheat to supply French factories”! We have increasingly frequent qualitative problems and unpredictable profitability. There is a real surface maintenance challenge and good market balance.
During the last campaign, the Russian and Turkish arrival really frightened durum wheat producers. This year, the French producer is not penalized by these emerging exporters, but at the same time he does not have his income because he made poor returns with a very poor quality.
This is not what will reverse the trend towards a decline in surface area and a lack of motivation to produce durum wheat. To restart production, we need remunerative prices in time.
However, we have both the climatic aspect which regularly handicaps French producers, and international competition, with countries which produce more and more durum wheat and which will improve in their production, such as Kazakhstan and Russia. .
