Australia: Barley demand strengthens as it remains cheapest feed grain

While the autumn break is widely sought across Australia, there is no general rain forecast, The Weekly Times reported on April 23.

Up-country demand for barley has grown as it remains the cheapest feed grain but supplies are limited. Other than the obvious drought-impacted production last season, supplies of barley from interstate have been restrained.

Barley for feed has been transported into the New South Wales markets via train and road but unlike wheat there has been a lack of bulk shipping of barley from Western Australia.

Grain traders have shipped in bulk cargoes of malting barley but the pricing of barley in the eastern states has been too low to justify the logistics cost of bulk shipments.

Wheat prices continue to weaken and barley prices strengthen. Two distinct tiers are appearing that restrict access to cereal grain demand. Wheat prices may be weakening for the stockfeed mills based in Melbourne but buyers in regional markets are not seeing the same softening market.

Grain for on-farm feeding of livestock is on the rise, particularly in central western NSW. Ewes are lambing and the nutritional needs of sheep are high. Many grain traders are holding wheat stocks bought from harvest pending sales this year. Aggressive pricing from West Australian grain and a lower world market has pulled back grain prices.

In general grain consumers and container packers have been able to secure sufficient stocks to maintain their businesses. Holding grain contracts on a delivered Melbourne basis has proven difficult. These contracts are unable to be converted to up-country stocks that could correspondingly access the burgeoning demand for on-farm feed grain this autumn.

Grain traders are also restricted from accessing the regional demand as their grain is in storages remote to the demand or inaccessible to domestic out-turn. Further limits on these markets are due to trading policies and the lack of credit assessments of the many potential buyers of grain.

One lesson learnt during this drought is the relative pricing of oilseed and oilseed meals. Unlike cereal grain, canola seed did not spike under the devastatingly pool production levels of last year.

Because oilseeds trade according to import parity and the pricing of US soyabeans has been subdued due to trade disputes with China, soyabean meal has found many willing buyers in Australia.

Feedlot lamb operators in particular have been taking advantage of this turning-off of lambs that are in prime condition, with little fat in 40 to 60 days.

22 April, 2019