China & France & Canada: China keeps sweeping up huge volumes of French and Canadian barley

China's buying spree of French and Canadian barley is spilling into the 2021/22 crop with large forward purchases, due to its major feed grain needs and a prohibitive tariff on Australian barley, traders and analysts said.

China has been sweeping up huge volumes of foreign crops to help feed a pig herd being rebuilt after a disease epidemic. In barley, an 80.5% tariff slapped on Australian supplies last year, amid diplomatic tensions with Canberra, has focused demand on other suppliers, Reuters reported on February 3.

A large amount of Canada's 2021 barley crop has already been booked by Chinese buyers, traders said, with one citing at least one million tonnes.

That would be in line with at least one million tonnes of new-crop European barley thought to have been sold so far, traders said.

Some said France would supply the European volume, with one trader putting French sales at up to 2 million tonnes, although others said the sales were on an optional basis and could be sourced partly from Ukraine.

Shipment would be mainly over July-September, traders added.

Barley export premiums for this summer's French crop surged last week as traders said exporters covered some of their hefty advance sales made to China since late 2020. This has put feed barley prices unusually well above bread wheat.

"The focus has really switched to the new crop," Brent Atthill, head of consultancy RMI Analytics, said. "That is validating the idea that Chinese demand is not short term."

Early sales of the 2021 barley crop were for livestock feed, according to traders and analysts.

China also imports malting barley to make beer ingredient malt.

Barley from Europe and Canada next summer will contribute to feed supply as China awaits its next corn harvest and maintains a steep tariff on Australian barley, Helene Duflot, analyst at Strategie Grains, said.

"The fact there have already been new-crop purchases from France and Ukraine, probably, shows that China is not about to change its mind on Australia," she said.

The tariff has slashed Australian barley shipments to China, handing opportunities to other further-away suppliers. For the European Union, collectively the world's top barley exporter, that has meant France, as the only EU country fully accepted to supply barley to China.

Booming Chinese feed grain use and high domestic prices could bring record barley imports this season like in other grains, Duflot said, projecting they will top 10 million tonnes for the first time.

Forecasts vary considerably, reflecting uncertainty about the level of Chinese grain stockpiles. The International Grains Council sees 2020/21 Chinese barley imports of 5.8 million tonnes and the U.S. Department of Agriculture 7.0 million tonnes, levels that would keep China behind Saudi Arabia in imports.

French barley shipments to China in the 2020/21 marketing year to June have already reached 1.8 million tonnes after a busy January of loadings, surpassing a total 1.5 million tonnes in 2019/20.

Although a lull is expected around this month's Lunar New Year, recent sales cited by traders for the end of this season are expected to bring French full-year exports to China above two million tonnes, with Strategie Grains anticipating a near-record 2.8 million.

Barley may also eclipse much-discussed French wheat exports to China. After 1.5 million tonnes shipped in the first half of the season, French wheat sales in the rest of 2020/21 were looking limited and no new-crop deals confirmed, traders said.

Canada, meanwhile, shipped 1.5 million tonnes of barley to China in August-December, already matching last season's total volume, official data showed.

03 February, 2021