China: Australia stopped buying Australian malting barley because of high prices

China has stopped buying Australian malting barley as a worldwide shortage has sent prices soaring, and further sales are unlikely until the next harvest later this year, Reuters reported May 11.

Australia's biggest barley exporter, South Australian-based ABB Grain Ltd., said this week that Chinese buyers were refusing to buy at current world prices.

East coast exporter GrainCorp Ltd. had the same experience, Ole Houe, manager of coarse grains, said on Friday.

Malting barley prices in China have risen more than $100 a tonne to over $300 a tonne this year, causing Chinese brewers to substitute other grains in brewing beer.

"At that level they say it's not economical for us to produce," Houe said. "They use all sorts of substitutes, such as rice, they malt wheat, they make do with a lot of stuff."

This had been triggered by small barley crops in drought-hit Australia, as well as in Europe. Australia would have 100,000 tonnes or less malt barley left to sell from the old crop, even if China was buying, Houe said.

There were also doubts whether Europe would have enough barley to export from its new crop, as shown by a $40 price rise in the last three weeks, he said.

"I would say the Chinese would start getting jittery quite soon," Houe said.

Australia would have more malting barley to export to China in November and December this year, when harvesting of the new crop began. This crop promises to produce bigger tonnages.

Australia sold 1.7 million tonnes of malting barley to China in calendar 2006 in a total import market of 2.15 million tonnes.

ABB also said this week that there was still some interest in Australian feed barley, primarily from the Middle East.

The likely fate of Australia's wheat monopoly focused this week on AWB Ltd. subsidiary AWB International being hived-off to run the "single desk" as an independent grower-owned entity.

This followed a proposal for the "de-merger" of AWBI by the main farmer groups from Victoria, Queensland, New South Wales and Western Australia states.

This was the first time a majority of farmer organisations had supported any single proposal for wheat marketing changes. That, said Australian Agriculture Minister Peter McGauran, was significant.

The Australian Grain Exporters Association, representing global grains trading giants which have long wanted to enter the Australian wheat export trade, asked whether AWB would have the numbers for a de-merger, even if it gets government support.

A de-merger will need a 75 percent vote of approval from all AWB shareholders, including the 36,000 A class grower shareholders and holders of 346 million B class ordinary shares.

Deputy Prime Minister Mark Vaile said this week that 20 percent of wheat growers still wanted AWB to run the single desk.

AWB spokesman Peter McBride reiterated on Friday that a de-merger remained the company's preferred position.

He also denied an Australian newspaper report which suggested that AWB had engineered the state farmer organisations' proposal.

"They've come with it independently," he said, adding that they did "run it past" AWB as a courtesy before presenting it to the government.

11 May, 2007