World: Global barley production projected 6.5% down from 2022/23

China’s removal of an 80.5-percent tariff on Australia barley marks a significant turning point in the agricultural trading relationship between the two nations. Implemented in June 2020, the tariff had virtually halted Australia barley exports to China, USDA said in their September report.

According to China's Ministry of Commerce, the action reflects "changes in the market situation of
barley in China" and is “no longer necessary to continue to impose anti-dumping duties and countervailing duties on the imported barley originating in Australia”. Over the past 3 marketing years, China barley imports averaged more than 8.7 million tons, and are forecast at 7.5 million tons in 2023/24. China largely imports barley for feed use with a smaller portion used for malting. However, tightening global barley supplies in 2023/24 present an obstacle for China import demand.

Global barley production is projected at 141.9 million tons, down 6.5 percent from the prior year and the lowest level since 2018/19. Major global barley producers and exporters, including the European Union, Russia, and Canada, are all forecast to have lower production in 2023/24. While Australia barley production is also forecast lower, exports are still forecast at 5.5 million tons owing to large stocks following 3 years of bumper harvests. By removing duties, China gains access to much needed supplies of barley from Australia in a year of thinner global exportable supplies. Recent rises in bids for Australia barley supplies support the idea of China’s switch in supplier origins.

Since early August, aggregate export prices for barley, as reflected by the IGC GOI (Grains and Oilseeds Index) barley sub-index, show a 3-percent month-over-month decline. French and Argentine barley, where China was buying most of its supplies prior to the policy shift, have both fallen to $235/ton, a 3-and 4-percent drop for each country, respectively. In contrast, Australian export prices jumped 8 percent to $255/ton, emphasizing increased demand from China after removal of anti-dumping duties.

For Australia, the removal of the tariff will not immediately restore trade volumes to the high levels seen in 2016/17. Supplies are more limited than in 2016/17, and Australia exported to other markets over the past few years of reduced trade with China. As a result, Saudi Arabia, Thailand, and other major importers will now compete with China for limited Australia barley supplies in the coming year.

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