Australia: A number of factors currently shaping the barley market
Often overlooked by analysts concentrating on the big ticket crops such as wheat and corn, analysts say there are a number of factors currently at work in shaping the barley market, Stock & Land reported on August, 17.
CBH barley marketing manager Rob Dickie said in particular the interplay between the malt and feed market would be worth watching over coming months.
“With feed barley trading off world coarse grain values, such as corn, it is really putting a floor in malt values, but as to how much of a spread there is going to be, that is unsure.”
Canadian analyst Greg Korstal said already the fickle nature of the malt market had led to the crop becoming more of a niche product in Canada, with growers preferring to focus on high yielding feed lines.
Mr Dickie said Chinese demand for malt was a positive for Australia, but said it would not mean massive premiums over feed for malt barley.
“Chinese demand is very strong and Australia is the major supplier, but equally it is a very price-sensitive market.”
He said low-cost producers such as Argentina could be a threat.
“Argentinean barley plantings are estimated to be up 17pc this year due to government policy there, which has an export duty on wheat, but not barley, so they will be a threat for Australia’s share of the Chinese market.”
He said Australian barley production looked like it would remain fairly steady at 8 million tonnes, out of a world crop of 132 mln tonnes, but the split between feed and malt would be crucial in terms of what the values for the crop would be.
“Even though we are a relatively small producer, the fact we export half of our crop makes what happens here important on world markets, in particular in terms of malt barley.”
He said there had been little movement in international markets in recent months, but now the Chinese buyers were looking at shoring up more supply.
On the feed side, Mr Dickie said Saudi Arabia’s massive 6.7 million tonne import program kept things ticking along.
“It’s hard to say how much in reserve they have in Saudi Arabia, given demand is just so large they just keep buying steadily.
“Overall in the barley sector we think stocks are getting down towards historical lows.”
John Stuart, technical adviser at GrainCorp, said Australian growers faced a more complex environment than 20 years ago.
“There used to be just one major variety in each major production zone, Stirling in Western Australia, Schooner in southern Australia and Grimmett in northern malt regions.
“It’s now more complicated, but there is a wider range of varieties.”
He said northern growers in particular, were set to have a better range of varieties to produce malt quality barley due to breeding advances.
In terms of a focus for the industry, he said with greater affluence in China, it was hard to see it not continuing to be a major opportunity for Australian malt barley producers.
17 August, 2012
