UK: UK barley facing a large export campaign this year
With another season requiring a large domestic barley export campaign, volumes moving off farm will need to pick up to avoid a surplus overhanging domestic markets in the UK, AHDB reported on August 12.
Taking a look at corn-return volumes this year highlights purchased feed barley volumes for Jul – Aug delivery sit 26% lower than last season (up to week ending 6 Aug).
Both the estimated 1.2 mln tonnes barley ending stocks figure for last season and increased (19%) barley plantings this season look to ensure a well-supplied market. Despite challenging growing conditions this year, the area increase could well outweigh any yield reductions.
Feed barley prices have remained pressured this calendar year. From the week ending 02 Jan to 06 Aug; the UK feed barley price (corn returns) increased just £1.90/t, compared to a £10.30/t increase for UK feed wheat.
The need to export this season will again face potential Brexit disruptions, though at a later point of January. Last season, over half (54%) of barley exports were shipped before the original October deadline. Given the new deadline of 31 December for leaving the EU, we may well see this activity again, in order circumvent potential tariffs.
Is there sufficient demand on the continent to support the market? Strategie Grains has pegged estimated EU barley production figures 1.7 mln tonnes above last season, at 64.2 mln tonnes. Additionally, the presence of maize imports will also add a degree of competition for feed markets.
With barley harvest progress now picking up across the EU, exports this season in the EU-27+UK have kicked off to a fairly slow start. As of 09 Aug, new season shipments to non-EU destinations were back 51% year-on-year.
The pressure on domestic barley prices is seemingly set to remain for the foreseeable period. Yes, there is a degree of support from a low UK wheat production figure, but the relatively limited interchangeability between barley and wheat means exports are the port of call for barley markets, primarily to move to feed markets.
A well supplied EU27 and maize imports will provide competition, while traditional third country destinations may see impacts on their domestic demand due to changes in policy affecting barley requirements in feed rations.
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