World: Barley market sensitivity only exacerbated by news from Ukraine
Dominating the news is the tragic situation in Ukraine and the repercussions associated. Specific to the world barley market, it was already highly sensitive to supply interruptions, and the news from Ukraine has only exacerbated these sensitivities, RMI Analytics said in their early March report.
As repeatedly stated, the crop 2021 production at 147.6 mln tonnes created a supply squeeze, given China’s appetite for barley, and now the invasion of Ukraine casts doubt on the Black Sea being able to supply a meaningful barley volume. The war in Ukraine is the third major interruption to China’s sourcing capabilities, following the Canadian drought and the Australia barley tariff. As a result, China faces a dilemma in 2022 should their demand remain elevated and there are limits to what the EU (France) and Argentina can do to replace other origins.
Barley prices are extremely well supported and very hard to define at the moment. Tightness in the barley supply & demand is increasing in the current uncertain environment.
RMI Analytics’ first projection for barley crop 2022 is 152 mln tonnes and a much needed rebound in output. However, this rebound is not back to the substantial crops in 2019 and 2020. The recovery in supply still leaves the balance sheet in a rather tight position into 2023.
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