Australia: ABB Grain Ltd announced on March 9 its opening barley gross pool indicators for Victoria for the 2005/06 season, set at A$180-A$190/t for malting 1 barley and A$140-A$150/t for feed 1 barley. ABB Grain Ltd managing director, Michael Iwaniw, emphasised that these estimates were based on export prices, and that the east coast supply of grain and the domestic demand for feed grain would be major influences on prices as the season progressed.
Speaking at the Victorian Farmers Federation conference, Mr Iwaniw said that predicting barley prices had become an increasingly difficult task because of the number of variables involved. “The key factor in establishing the price is the build up in international stocks which are primarily expected from increased production in Europe,” Mr Iwaniw said.
“Eastern Bloc countries such as Ukraine and Russia have emerged as regular exporters, but are prepared to accept low prices to gain quick sales in hard currency. “Further, the resumption of export subsidies from the European Union adds a random element that as we have seen before can have a sudden and huge effect, depending on the policy approach taken.”
Mr Iwaniw said that the returns to Australian grain growers were also being affected by the higher Australian dollar in relation to the US dollar with exchange rates in the region of US75-80c having a direct deleterious impact on the prices offered growers. “On top of this are sea freight rates that have now been at appallingly high levels for several years. To an importer, the combined effect of grain price plus freight rate makes feed barley look very expensive compared to other feed grain.”
Mr Iwaniw said domestic factors such as the deregulation of exports from New South Wales would be likely to have a downward impact on prices, as there would simply be more sellers of Australian barley. “The GLA in Western Australia adds an element with little relation to supply and demand, so it’s hard to predict how that will impact,” he said.
The price forecast is based on the assumption of an average season, which means no particular domestic price effects due to shortages or quality issues. “I fervently hope that this forecast turns out to be wrong and that factors change to push these prices up, however this is our best assessment of the market prospects at this time,” Mr Iwaniw said. “The final prices for this grain won’t be known for over two years from now, so it is still very early and much can change in the volatile barley market. We will keep growers informed as the season progresses.”
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