Australia: ABB Grain Ltd announced its final pool distribution for 2003/04 barley

ABB Grain Ltd announced on June 21 it will finalise its 2003/04 barley pools on 23 June 2005, providing around A$49 million to growers across the country.

The final gross distribution for the No.1 pool is A$45.27/t for malting 1 barley and A$18.02/t for feed 1 barley. The final payment brings the total gross returns for the Victorian and South Australian 2003/04 barley pool to A$200.27/t for malting 1 barley and A$171.02/t for feed 1 barley.

ABB’s managing director, Michael Iwaniw, said that although the pool returns were at the low end of the company’s estimates, many factors had played a part in the final returns particularly after the harvest season was completed.

“Large crops were produced in the 2003/04 season, leading to record receivals for ABB and an abundance of grain to market,” he said.

“ABB offered Victorian growers the opportunity to contract into a pre-harvest pool to ensure the highest possible returns. In addition to this, ABB left its 2003/04 harvest pool open later than usual so all growers were given the opportunity to participate in the pools, which became even more important at the time when many cash buyers pulled out of the market.”

Mr Iwaniw said that markets could only accept so much grain at a time, with ABB taking over 12 months to place all of the grain it had received for the season.

“As was demonstrated in 2003/04, a lot can happen market-wise in a year.

“While Australia produced a near record crop in 2003/04, this was followed by very high production in the Black Sea countries, eastern Europe and the European Union (EU).

“The abundance of barley in the market saw FOB returns for feed barley fall around US$65/t FOB in a short space of time. Although ABB made a lot of early season sales, there were still large tonnages of barley left to sell, competing against northern hemisphere barley at extremely aggressive levels.

“The huge crops and aggressive export campaign from the Black Sea pulled prices down from early season highs.”

Mr Iwaniw said that the large international crops did not have as much impact on the malting barley market.

“Malting barley prices in key ABB export markets remained relatively strong, on the back of high freight rates and a firm Euro.

“One effect of this was that Chinese maltsters increased the amount of adjuncts used in brewing beer – from around 25% to 40% in some cases – which meant less malting barley was required for beer production. This was in addition to the increase of local Chinese malting barley being used.”

Details of the distribution for each pool payment option are explained below.

Extended Pool
Growers who elected the Extended Pool payment option will receive the final distribution as a full payment. Malting barley is subject to 20% of the quality sliding scale adjustments (No.1 pool only). GRDC, NRS levies and VFF levies where applicable will be deducted from the net amount.

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