Australia: Barley production forecast at 11.74 mln tonnes

Australia’s barley production has been forecasted by CBH Group at 11.74 million tonnes, marking an increase of 23 per cent versus the 2019/20 season, the Farm Weekly reported on October 30.

In Western Australia the co-operative is predicting 3.85 mln tonnes of barley production which is a similar result to last year but will be achieved through lower hectares and slightly higher yields.

In New South Wales (NSW) it is forecasting a 2.76 mln tonnes crop, however the general consensus is that that crop will likely end up over 3mt and potentially closer to 3.5 mln tonnes.

There is upside potential in CBH's production forecast numbers for NSW and Victoria and to a lesser extent South Australia.

On the other hand there is probably some downside potential in Western Australia (WA) due to the dry finish received in September which took some of the yield potential away.

CBH barley trading manager Drew Robertson said at a very high level, global barley supply and demand seems to be relatively well balanced.

"We've got a total production of 156.75mt and a total consumption of 155.75 mln tonnes, which means ending stocks will be about 1mt higher this year at 20.65 mln tonnes," Mr Robertson said.

"In terms of consumption the market is expecting there to be lingering impacts as a result of COVID-19 which will continue to impact demand in 2021.

"On the other side of the coin, barley looks relatively cheap compared to alternative feed grains and as a result of that we could expect the demand for feed barley to actually increase in 2021."

In terms of WA barley exports over the last four years, China takes up a very large share with 60pc.

To a lesser extent, Thailand and Australia have also been important markets - Australia due to the drought on the east coast over the last couple of years and Thailand as a result of their increasing use of feed barley in their feed rations.

Mr Robertson said Japan has also been a consistent market for Australian barley and remains the second biggest market.

"Our forecast of where WA barley exports will go for the 2021 season is Japan, Thailand, Saudi Arabia and to a lesser extent Kuwait - all will increase their share of WA barley exports but they are predominantly feed barley markets," he said.

"The reason why there has been such a limited premium for malted barley in recent times is because China has a malting capacity of 5.3mt which far out strips the capacities in any of the neighbouring countries in our region.

"The second biggest malting market is India at 536,000t, followed by Vietnam at 170,000t."

Further abroad in Africa and South America, which could be potential malting markets for Australia in the future, their malting capacity is still nowhere near the 5.3mt capacity in the China market.

On top of that, most of those markets already have established trade flows with Argentina a net exporter to South and Central America.

Australian feed barley is now equivalent to the cheapest feed barley in the world and as a result is calculating to all major demand centres, this is going to be important to Australian barley going forward in order to make sure it keeps touch with global markets.

"There's been a lot of talk about India as a potential new market for Australian malting barley and there has been a lot of work which has been undertaken to try and gain access into that market," Mr Robertson said.

"The Government has done a lot of work with regards to the fumigation requirements and there is still a lot of work continuing on phytosanitary requirements so we can meet them.

"We also need to consider that India does not have any import tolerances for glyphosate and imazapyr so the market residue limit (MRL) is that market is zero."

In terms of other future markets, in 2016/17 22,000t of Australian barley went into the Thailand market.

Since then it has grown quite rapidly and in 2019 over 430,000t went there, while in 2020/21 CBH sees the potential for over 1mt of barley going into the Thailand feed market.

The Indonesia-Australia Comprehensive Economic Partnership Agreement (IA-CEPA) was ratified in June 2020 but the market is not very familiar with Australian feed barley, as a result more work needs to be done to continue to develop that market over the next 12 to 18 months.

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