Gus Trompiz, Giancarlo Navaach

PARIS/MILAN, (Reuters) – Italian pasta manufacturers are worried about a significant supply shortage in the next months following this summer’s price shock for durum wheat. This is because the market has run out of options to compensate for a poor harvest in Canada.

The North American nation, which normally accounts for around two-thirds global durum trade volume, is expected to experience extreme heat and drought in this year’s season. This will result in a reduction of approximately 3 million tonnes, or nearly half the production levels by 2020.

Durum quotations have risen to new 13-year highs. This raises concerns about inflation in a time of economic recovery from COVID-19.

A United Nations Food and Agriculture Organization index shows that food prices have reached a 10 year high. The cost of bread is also increasing as European wheat prices reach a 13-year record.

The country’s food industry is particularly vulnerable to disruption in the market for niche wheat varieties, as recent forecasts of Italy’s durum crop (which typically supplies most pasta maker’s needs) are not being updated.

According to Strategie Grains analyst Severine Ommnes-Maisons, some Italian processors could be left short of the crop and face production interruptions over the next few months.

“Prices and scarcity are the most serious threats to durum prices, but they may be just beginning.”

Canada suffered a similar decline in production to the world’s durum stock levels, which were already low for six years. Partly this was due to pasta hoarding at home during pandemic lockdowns.

Many crops saw their prices rise this year because of harvest setbacks, rising supply chain costs and increasing demand. However, tensions have flared in durum, where export prices have almost doubled since June.

The durum crop in Italy was originally expected to exceed 2020 levels, however, in October, the European Commission cut the estimate to 3.7million tonnes, down from 4.3million. Pasta makers are now worried about how the supply will be available in the first quarter of 2022.

Vincenza Divella chief executive at Divella pasta company said, “It’ll be more dramatic that it is now because domestic wheat can still be found.” “The situation regarding durum wheat has become very grave.”

WEATHER SHIFTS

This year’s harvests could result in even less supply than expected. Omnes-Maisons suggests that Canada’s official durum production estimates could be reduced in December due to unfavorable local crop reports.

Rhyl Doyle from Paterson Grain, Winnipeg director of export trading, stated that “Durum represents the greatest challenge for balancing international import requirements and global export availability.”

Canadian suppliers have had to be adjusted by some buyers. Australia, which has been the EU’s second-largest supplier of durum this season after Canada is expected to take over large import purchases by Algerians in September.

After suffering through similar weather in spring, America is expected to experience a drop of half its annual production. France’s rain-hit crop has curbed European production.

Some have attributed this to weather changes that caused a shift in the balance between dry and warm growing conditions, which is ideally suited for producing hard-to-produce wheat varieties.

Alberto Cartasegna is chief executive at Miscusi which operates a dozen Italian restaurants. He stated that the rise in durum wheat prices was a sign of climate change.

PAYING MUCH MORE FOR STAPLES

Partly, paying more for staples made from durum and moving to common wheat will help you adjust to low stock levels.

Even though some pasta manufacturers are passing on double-digit percentages to consumers, price increases are unlikely to reduce pasta demand in rich European countries.

Emerging economies may see a shift in consumption patterns.

North African households are likely to see an approximately 25% rise in the price for durum-based semolina bread. This will increase the demand for soft wheat bread.

Abdelaziz Bouchireb (an Algerian baker) said about semolina bread, “We have no option but to increase the prices to cover costs.”

Turkey, an important exporter of pasta, relaxed earlier this year rules for increasing the amount of common wheat permitted in pasta exports, moving it from 30% up to 100% as a response to decreasing durum supply.

Strategie Grains predicts that there will be a 6 percent drop in world food consumption of durum between pre-pandemic and current levels.

According to the International Grains Council, worldwide durum consumption will reach a 19 year low during that time. However, it projects that end-season durum stock levels will be at their lowest level in 14 years. This suggests that the market is on a tightrope before next year’s harvests.

In wealthy countries, even the most well-off may experience financial hardship.

Nielsen Market Data Specialist says that in October in France supermarket prices of budget pasta brands, those most dependent upon raw material costs, rose by nearly 20%. This suggests significant future increases.

The United States still stocks products last year made with durum. This means that tighter supply chains haven’t affected all of America’s stores, according to Jeffrey McPike. McWheat Trading Inc. is a U.S.-based consultant and trader.

He said, “It’ll,”