Mexico's growing strength in durum wheat threatens the improved prospects - for North American exporters – promised by the settlement of a trade dispute with Europe, the world's biggest grain seller has said.

Mexico is set to export 850,000 tonnes of durum in 2009-10, nearly twice its historic levels of shipments, according to International Grains Council forecasts.

While the country is still a mid-ranking durum producer, its crop will put "additional pressure on prices" when it comes onto the market next year, the Canadian Wheat Board said.

Mexican farmers have increasingly turned to durum wheat – the type used for making pasta - over traditional varieties, allowing the country to build a surplus, albeit at the expense of bread-making grain.

"Mexican producers find that durum wheat is simply easier to grow and yields more than other varieties," US officials noted in a report earlier this year.

Dispute settled

The CWB's warning comes a week after it welcomed as an "important" breakthrough the European Union's removal of a tariff amounting to E16.73 per tonne on imports of high quality durum.

Durum prices have been undermined by drop in global shipments, which the CWB believes will fall by 200,000 tonnes to 7m tonnes this year, at a time when farmers in the Americas have enjoyed bumper crops.

Trade will be weakened by a 70% jump in production in North Africa, which will "reduce import requirements and shift much demand later in the marketing year". 

Falling prices

The CWB estimates its high-quality durum pool will return Can$216 a tonne to farmers in 2009-10, 41% less than a year before.

The price downturn has also been reflected in the US market, where low prices have hit US subsidy triggers, and in Australia, where grain handler AWB last week cut by Aus$20 to Aus$295 a tonne its estimate for growers' returns from its high-quality durum pool.

The pool last year returned up to Aus$510 a tonne.