It seems that at least this year, there was plenty of rain on the plains in Spain. A wet spring has boosted Spain’s durum wheat production this year. Mild temperatures and abundant precipitation during March 2018 have resulted in a bumper crop for Spanish durum producers. Here’s what it means for North American durum producers…
While the wet weather and warm temperatures were welcome after a dry winter, harvesting is over three weeks delayed due to spring planting delays caused by rain.
Water reservoirs in the country are at about 70% capacity, well above the 10-year average as well as the previous two years for this time of year. Both irrigated and non-irrigated crops are expected to have higher than average production, despite the late start to this year’s crop, as no water restrictions are currently in place.
Despite dry conditions this winter, analysts expect Spanish durum producers to harvest a bumper crop.
Spanish farmers have steadily increased their planted acres of durum over the past five years, although planted acres in 2018/19 were slightly lower than the previous year. This is probably due to the impact of dry winter conditions and a long-term trend of increasing tree crops (such as olives or tree nuts) at the expense of grains such as durum.
During the 2017/18 marketing year, Spanish farmers planted 424,300 hectares (or 1.05 million acres) of durum. In 2018/19, Spanish producers are expected to plant 389,600 hectares (or 962,722 acres) of durum.
While this represents a slight decrease in planted acres year-over-year, compared to 2014’s 297,100 hectares (or 734,150 acres), durum acres in Spain are increasing steadily. See the chart below for a visual representation of how Spanish durum acres have changed in the past five years.
On the production side, Spain has shown some impressive increases as well. While production was down slightly in 2017, it is expected to rebound to between 1.09 and 1.39 MMT during the 2018/19 marketing year.
So what does all of this mean for durum prices on the other side of the Atlantic?
Well, to be frank, it’s not great news. More supply of durum coming out of Europe could mean that EU countries won’t need to import as much North American durum. Therefore, this is a bearish factor for durum prices that we’ll be watching closely as the Spanish crop comes in.
We’ll discuss it a bit more over the coming weekend…