Durum pressured even without EU tariff: CWB

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Published: November 6, 2009

By itself, the European Union’s removal of a tariff on high-quality durum wheat won’t prop up durum prices, but will still restore access to a key market for the Canadian Wheat Board.

The EU tariff on high-quality durum was in place for a month before it came off last Friday, the CWB said in a release Thursday.

According to CWB CEO Ian White, EU officials ended the tariff after the CWB and other grain-industry players “raised concerns about errors in its calculation.”

Durum sales to Europe were hindered as customers took a wait-and-see approach to the impact of a tariff which the CWB said jeopardized over $200 million worth of exports of Prairie farmers’ durum.

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The board said it exports about 3.5 million tonnes of durum per year on average, or about half the entire world trade. The EU, particularly Italy, is a key durum market for Western Canada, usually ranked among the top five customers each year.

However, the CWB said Thursday, durum prices have dropped “significantly” as worldwide supplies have increased and global trade is expected to be reduced by about six per cent, to 6.9 million tonnes.

What’s more, the CWB said, Prairie farmers have produced an estimated 5.2 million tonnes of durum this yea. That’s their fifth-largest crop ever, and up a million tonnes from initial expectations, the board said.

On top of that is an unexpected increase in U.S. durum production, up 30 per cent from last year to three million tonnes, the largest U.S. crop in 11 years, the CWB said.

And North Africa, generally the largest importer of Prairie durum wheat, has also raised its durum production by 70 per cent over last year to 5.8 million tonnes, the board said.

As of Oct. 22, the CWB noted, the 2009-10 pool return outlook for No. 1 Canada Western Amber Durum (CWAD) at 13.0 per cent protein is $216 per tonne, down 41 per cent from the projected final return for the same durum last year.

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