Italian pasta makers have elevated Australian durum wheat to their product of choice.
Australian durum wheat may be produced in small quantities but it has a big reputation for superior quality in key European markets. In particular, at the birthplace of pasta, Italy is increasing its preference for Australian durum over its traditional import origin Canada. Tom Smibert, Glencore Agriculture’s Wheat and Durum Trader, said Italian pasta makers valued Australia’s high quality, chemical free durum wheat. “End-users find Australian durum attractive due to its low moisture, high flour yield, colour, high vitreous kernel count and high protein,” Tom said. Italy is the world’s second largest producer of durum, behind Canada, and makes up 50 per cent of Europe’s total durum production.
Italy’s production deficit has historically been about 2-2.5mmt, however this reduced to 1.07mmt in 2017/18.
“A more health-conscious consumer has led to a change in diet which has seen pasta consumption decrease by almost 25 per cent over the last 10 years,” Tom said.
“Italy has also had a huge push for self-sufficiency over the past few years which has increased their domestic production and reduced their reliance on imported product.”
Despite this, Australia remains a very important origin for Italian pasta makers and there is steady demand for the Australian product.
“The presence of vomitoxin in the 2016 Canadian durum crop combined with an aversion to glyphosate from the Italian consumer, has seen demand for Canadian durum reduce in Italy,” Tom said.
This has seen some of the demand switch from Canadian origin to Australian, United States and also Kazakstan – a producer on the rise.
Much like Australia, the Kazakstan growing season allows for natural ripening of durum and as such, does not require chemical desiccation. In 2017 Kazakstan exported approximately 200,000mt to Italy but this will likely triple in 2018 if production allows.
“Kazakhstan’s importance is increasing in the global durum market and it has been trading at a premium to Canadian durum,” Tom said
“We believe nil or low glyphosate durum will be in high demand over the next two to five years and Australia is well placed to participate in this demand.”
In 2017/18 Australia’s durum will exports to Italy will be about 130,000-150,000mt, the largest in many years. However this is likely to drop off in 2018/19 due to lower production in New South Wales and South Australia resulting in a more domestic focused market.
“We are a small supplier to Italy, but a very important one,” Tom said.
“As a result of the increase in demand for Australian durum, we expect it to continue to maintain a premium over bread wheat and encourage growers to increase their hectares.”
Other markets
Glencore Agriculture is the largest durum trader globally and has important insights into the market.
The Middle East and Africa are other major importers which use durum wheat for flat breads, cous-cous and some pasta.
These countries are great destinations for Australian durum in large production years or when there are quality issues, but price needs to be more competitive. Aside from Italy, in 2017 and 2018 Australian durum made its way to Kuwait, Egypt, Morocco, Algeria, Nigeria and even Tunisia, a generally low quality price focused buyer.
“Kazakhstan and Russia are also increasing their hectares and market share, with Kazakhstan in particular having quite good quality.”
Competitors
Canada is the world’s largest producer of durum wheat, with production forecast to be about 6.1mmt in 2018/19.
Tom said Canada used to make up 65 per cent of durum’s global seaborne trade, however this has dropped due to its reduced tonnages into Italy. “Major quality damage in Canada in 2015/16 resulted in consumers reducing reliance on Canadian durum, and their dominance of the durum market waned as a result.
“Some relaxation on Canadian imports into Italy will see this figure increase into the end of the year.