News
09.11.2009
E.U. wheat tariff gone, market challenges remain
The Canadian Wheat Board (CWB) on Nov. 5 welcomed the removal of a European Union (E.U.) durum wheat tariff.
"During times of low global grain prices, import tariffs become more common," said Ian White, CWB president and chief executive officer. "Although the removal of a tariff into one market is not enough to brighten the overall situation for western Canadian durum producers, it is an important issue."
The CWB said the tariff had jeopardized exports of durum wheat worth more than C$200 million. White said that the E.U. tariff was removed after the CWB and other grain-industry players raised concerns about errors in its calculation. The tariff on high-quality durum was in place for a month before it was removed on Oct. 30.
Western Canadian farmers grow more durum wheat for export than any other farmers in the world, the CWB said. The board exports a total of roughly 3.5 million tonnes of durum each year on average, about half the entire world trade. The E.U., particularly Italy, is a key durum market for Western Canada, usually ranked among the top five customers each year, the CWB said. Western Canadian farmers have produced an estimated 5.2 million tonnes of durum this year, which is the fifth-largest crop ever — up a million tonnes from initial expectations.
Durum prices have dropped significantly as available worldwide supplies have increased at the same time that global trade is expected to be reduced by about 6% to 6.9 million tonnes. Another significant factor affecting durum prices was an unexpected increase in U.S. durum production, which is up 30% from last year. Meanwhile, durum production in North Africa, generally the largest importer of Prairie durum wheat, has increased by 70% over last year to 5.8 million tonnes, which will reduce its import demand, CWB said.
The large North American production has combined with weakened demand to create significant pressure on prices. The CWB said its 2009-10 pool return outlook for high quality durum is C$216 per tonne, down 41% from the projected final return for the same durum last year.
World Grain
