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E-Malt.com News article: Australia: Australian barley export prices reach three-year low in September
Barley news

Export prices of Australian barley, which is used in animal fodder and beer production, reached a three-year low in September, after experiencing a sharp downturn this year due to plunging exports to China, the country's biggest market. Behind this is friction between Canberra and Beijing over the origin of the new coronavirus pandemic, the Nikkei Asian Review reported on October 3.

On Sept. 1, the General Administration of Customs of China announced a partial ban on imports of barley from Australia, a leading player in world barley export markets, citing the discovery of pests in shipments from grain growers' cooperative CBH. With the Australian exporter denying the charge, bilateral tensions between the two countries have inflamed.

Long before the announcement by the GACC, China in May slapped tariffs of more than 80% on barley imports from Australia, claiming the grain was priced unfairly low.

The prohibitive tariff caused exports from Australia to China to plummet to 1.09 million Australian dollars ($777,606) in June, down 99% from the previous month.

The effects of the recent import ban are expected to be meagre in the wake of the already steeply reduced shipments from Australia. But exports to China will "drop limitlessly close to zero this year," said an official at an Australian fodder producer.

The friction was triggered back in April, when Canberra called for an independent investigation into the origin of the COVID-19 pandemic. Sharply reacting to that call, China in May suspended beef imports from some Australian meat processors, as well as imposing the barley tariffs. Then in August, Beijing launched an anti-dumping investigation into Australian wine while warning its citizens against traveling to Australia.

Australia is the biggest barley exporter after Russia and Ukraine and the European Union, according to the U.S. Department of Agriculture.

Prices of malted barley, used in the production of beer and other distilled alcoholic beverages, came to around AU$295 per ton on a free-on-board basis at the end of September, the lowest in three years and three months. The price of barley for fodder stood at AU$225, a 40% fall since the start of 2020 and the lowest since April 2017.

Plunges in Australian exports to China have loosened supply and demand balances, boosting shipments to Japan, which relies on Australia for 50% of its barley imports. As a result, feed barley prices in Japan are starting to decline.

It appears that there has so far been less on an effect on edible barley, however. For edible barley used to make beer and "shochu" distilled spirits, "we have not received requests for purchasing more or discount offers from Australia," an official at a Japanese beer brewery said. An official at a sake brewery added, "We are unaffected because we have concluded long-term contracts."

Australia used to be the source of most barley imports around the world. But Canada and Europe have grown as sources of the grain in recent years due to price rises caused by China's increased demand for the cereal and drops in output in drought-hit Australia, according to one fodder producer.

But given the price falls of Australian feed barley resulting from loosened supply and demand balances in the wake of weakened demand in China since May, "an increase in the procurement ratio of Australian barley is causing drops in trading prices," said an official at the manufacturer.

While prices of corn, soybean and other feed grains remain high, the lower price of barley is contributing to drops in assorted feed prices. As feed barley is widely used in beef production, the price of feed for cattle could drop more than that for poultry, for example.


03 October, 2020

   
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