Australia & China: China’s ‘insatiable’ demand for Australian barley could continue

China is soaking up almost all of Australia's barley exports due to rising livestock feed demand and the trend could continue as Beijing looks to divert corn supplies toward ethanol fuel, an Australian export firm said on January 26, Nasdaq reported.

China now buys 80-90 percent of Australian barley exports, reflecting "insatiable" demand from its livestock industry, Scott Haughton, managing director of Peter Cremer Australia, said.

"Australia has turned away from global barley pricing due to this fact," he told the Paris Grain Day conference organised by consultancy Agritel. "If you look at Australian barley and (China's) Dalian corn on any given day there's a correlation."

Australian barley exports are expected to fall sharply this season to 5.5 million tonnes after a weather-hit harvest, Haughton said, but Chinese demand is likely to remain strong.

The adverse weather also affected crop quality, which has reduced the amount of malting-grade barley and helped Canada take some market share in China in the malt segment.

Chinese reforms of agricultural policy could sustain strong demand for Australian feed barley as China plans to develop use of ethanol fuel that could absorb some of its huge corn stocks, Haughton said.

Chinese demand could encourage Australian farmers to grow more barley as wheat exports are curbed by the growing presence of Black Sea origins in Southeast Asia, Haughton said.

"The Australian dream of being the sole supplier of Southeast Asia is not likely," he said of wheat.

Rising production in Black Sea region producers Russia and Ukraine, coupled with low shipping costs, has notably seen Australian wheat lose market share in Indonesia, the world's largest wheat importer after Egypt.

27 January, 2018