Australia: Farmers storing old crop barley waiting for more joy on the market

Australian farmers who have taken the punt on storing old crop barley are waiting for a signal from the market, with prices remaining in the doldrums, FarmOnline reported on May, 25.

The malt market is providing no joy, with buyers offering no more than a nominal spread between feed and malt values, while the feed market has been hit by reduced demand out of Saudi Arabia.

With buyers unwilling to buy malt barley that has been stored for too long, due to concerns about its germination qualities, farmers holding malt barley will be keen to offload their grain in the coming two to three months, but so far have received little pricing incentive to do so.

Malt prices on the east coast are hovering at around A$215 a tonne port, with feed values about A$15/t lower.

Cargill senior feed grain merchant Sam Napier said the coarse grain market was currently in limbo.

“Feed barley markets are in limbo waiting on price signals from the new crop Black Sea harvest in July.”

He said uncertainty surrounding the weather and the export situation in Russia and Ukraine, both of which have had export bans in place, meant the trade was taking a cautious approach to feed barley.

Emerald Group general manager of commodities, Chris Kochanski, said Saudi Arabia, a key importer of Australian barley, had been quiet this year.

“They have taken up to eight million tonnes but they are back down to six million this year.

“They may be running down their supplies a little and perhaps using a bit of cheap African corn as they wait for the new crop Black Sea grain to become available.”

Domestically, Mr Kochanski said end-users were happy to use feed wheat at its premium over barley and sorghum.

The exception is in WA, where the drought means there is a massive premium for feed barley, as graziers attempt to maintain their flocks.

Mr Kochanski said some support for the market could occur if there was further downgrading of coarse grain crops in Western Europe.

Mr Napier said Australian farmers also had to contend with record commodity values.

“In USD terms we are A$100 higher than this time last year, but half of this gain is absorbed in the stronger dollar.”

While the old-crop scenario is not that promising, Mr Napier said the high values for corn could have a spillover effect in the medium term.

“If corn price are supported for the next 12 months then barley prices should also be supported as it is the cheapest feed grain in much of the world and will be substituted instead of corn in parts of the Middle East and Europe."

With this in mind, Mr Napier said he did not believe there would be a wholesale move from barley to wheat in Australia this season.

“Barley remains an important part of the rotation in Australia.”

He agreed with Mr Kochanski that it would be hard to move feed barley domestically.

“The large supply of feed wheat taking market share from barley in the domestic feed ration meaning we will need to keep exporting barley for most of the year.”

27 May, 2011