Global durum wheat production for the season is estimated at about 27 million tons, down sharply from last year's record of 33 million tons, according the latest report from the US Department of Agriculture (USDA).
However, supplies from last year's record crops in some categories might offset the demand and supply equation.
Durum wheat is used to make semolina flour for pasta. The world's major exporters, Canada, the EU and the US account for a combined 60 per cent of total durum production. Their total output has decreased by nearly 20 per cent this year, mostly due to smaller crops in the EU.
Drought reduced output in EU and Morocco. The EU will account for 28 per cent of total world production this year compared to 36 per cent last year. EU production is estimated to decrease by 36 per cent from the 2004/2005 season due to prolonged dryness in Spain, Portugal, and Italy, and a reduction in seeded area.
EU durum wheat production is estimated at 7.6 million tons in 2005, down 36 per cent from last year's record crop and 15 per cent below the five-year average. The harvested area fell by 15 per cent from last year while yields are estimated at 2.32 tons per hectare, down 25 per cent from last year.
Durum traditionally accounts for eight per cent of total EU wheat production. The big durum producers in the EU are Italy, which produces 48 per cent of the bloc's output followed by Spain, with 22 per cent, France with 18 per cent and Greece with 10 per cent. Austria and Portugal usually produce one or two per cent of the total EU durum harvest.
In Italy, the largest EU producer, durum production is estimated at 3.5 million tons, down 40 per cent from last year's record crop of 5.7 million tons.
Canada's durum production, which accounts for 20 per cent of global output, is higher than the previous year. Durum harvesting in Canada is about 80 per cent complete, although there are some quality concerns due to excess rains during harvesting, the department reported. Crops in Algeria, and Tunisia, are lower this year mostly due to unfavorable weather.
Durum in Argentina is expected to be lower due mostly to lower area as farmers are expected to switch to more profitable crops such as sunflowers and soybeans.
Production in Turkey is lower as a result of reduced durum procurement prices which are similar to the milling wheat prices this year. Because of government's policy changes on procurement, some of Turkey's farmers switched from durum to the higher-yielding milling wheat this year.
In Syria, output is slightly higher due to higher prices. Durum in Syria accounts for nearly 50 per cent of their total wheat crop. Durum production in Russia is expected to increase over last year's drought-reduced crop.
Meanwhile the European Commission has revised all wheat production estimates upward. Wheat production in the EU is estimated at 122.7 million tons, up one million tons from the estimate last month, but down 14 million tons from last year’s record production.
New harvest data supported raising production estimates for Italy, Germany, the Czech Republic, Finland, Denmark and Hungary. Production estimates were lowered in Slovakia.
Meanwhile prices for yellow corn on the US commodity markets rose in October by six per cent.
The European Commission has revised its corn production estimates at 46.9 million tons, up 1.1 million tons from last month, but down 6.4 million tons from last season’s record crop and lower than the five-year average.
The growing area remains unchanged at 5.9 million hectares from last month but down seven per cent from last year and two per cent from the five-year average.
The revised estimate is largely attributed to new harvest results, which suggest better than expected crops in the central and eastern countries. Estimates were revised upward for Italy, Spain, Hungary, Slovakia and Czech Republic. Still France’s estimated 2005/06 corn production estimate of 13.2 million tons is 3.2 million tons below last year’s output, while Spain's is estimated to be down 1.3 million tons.
Corn prices might be affected by the effect highly pathogenic avian influenza (AI), H5N1, being reported in Russia, Turkey and several other European countries, the US agriculture department reported. With the resurgence of H5N1 in China and Southeast Asia, analysts have been predicting that global feed demand might fall.
During the previous outbreak in Asia a year ago, the effects were mostly temporary and, with a few exceptions, poultry production and feed demand bounced back within months.
In the case of China, reductions in poultry consumption were offset by increased pork consumption. In 2003, the Netherlands had an outbreak of H7N7, another highly pathogenic AI strain, which led to the culling of over 25 million birds. Within a year, the poultry sector largely recovered and feed demand returned to its previous level.
Rye global trade estimates were slashed this month to the lowest level in nearly 30 years as a result of smaller expected sales of EU rye out of the bloc's intervention stocks.
The Commission granted export licenses for about 2,000 tons this marketing year, compared to 261,000 at this time last year. Drought in Iberia has resulted in strong demand for feed grains, and there have been steady sales of intervention rye to Spain.
Companies have raised bids for these intervention supplies to almost €80 euros, compared to bids near €50 euros for export outside the EU's 25 members. World rye trade has traditionally been dominated by the EU-25, as large intervention stocks were exported at low prices.
However, under new rules rye is no longer eligible to be sold into intervention, and, with shrinking intervention stocks and stronger domestic demand for use in ethanol, EU exports and consequently world rye trade will likely remain at lower levels for the long-term, the USDA forecasts.
Due to the weather the harvest of winter grains has been prolonged throughout Eastern Europe. Heavy rains continued to fall into early autumn, further dampening an already wet corn and sunflower crop, the USDA reported.
The combined effects from a delayed winter grains harvest and wet summer crops has resulted in a delayed harvest for the Balkan's dominant summer crops of corn and sunflower.
EU-25 barley is up 500,000 tons to 3.8 million tons with very strong shipments reported in recent months, the US agriculture department forecasts.
Figures from the UK's Home Grown Cereals Authority (HGCA) indicates that demand is mixed for cereal crops in that country. A survey in the UK during July and August indicates that the flour milling sector, including starch and glucose producers, was up three per cent on last season. Within the total imports of wheat rose by 69 per cent.
Distillers demand for wheat fell by 18 per cent on last season. Maltsters and distillers barley usage was 10 per cent lower.
Corn usage for all food sectors fell by 10 per cent, while oat millers increased their demand by five per cent.
The UK wheat balance is very different from last season due to the smaller harvest, which has resulted in lower export availability. The gap was partially offset by high carry-in stocks which drove high exports of old crop wheat in July and August, HGCA reported.
For barley, the decline in production continues, which coupled to a more buoyant EU and world barley market, has resulted in higher barley prices relative to wheat over much of the UK.
In September the Food and Agriculture Organisation (FAO) estiamted global yields of cereals would fall for the 2005/06 season and demand would rise.
World cereal production in 2005 is forecast at 1, 984 million tonnes, 3.4 per cent less than 2004's record output, according to the latest estimates by the
Meanwhile total world cereal demand is forecast to reach 2,015 million tonnes in the 2005/06 growing season, up 10 million tonnes from the estimated level in 2004/05, while total cereal consumption for food is forecast at 983 million tonnes, up 1.3 per cent,
Most of the anticipated decrease in global cereal output in 2005 is in developed countries, mainly reflecting smaller coarse grain crops. In the United States, adverse hot and dry weather for the maize crop was responsible for most of the downward adjustment for coarse grains. Drought also hit crops in parts of the EU.
World cereal trade in 2005/06 could reach nearly 236 million tonnes, three per cent down from the 2004/05 volume, mainly reflecting good crops in some of the main importing countries, the UN body estimates.