China’s barley imports continue to drive up global prices

Barley

China

Market & Price Trends

Published Jun 10, 2021

Australia is the second-largest exporter of barley globally, representing 30-40% of the world’s malting barley trade and 20% of the feed barley trade. Before May 2020, China’s main source of barley used to be Australia, representing 42.2% in trade value in 2019. However, the market share of Australian barley fell to 19.3% in 2020 due to the new trade regulations. The price of barley worldwide is increasing sharply as China imports from other countries after hitting Australia with steep tariffs. Australia also started to penetrate new markets, and recently, Saudi Arabia has become one of the largest importers of Australian barley in the last year.

Australia is the second-largest exporter of barley globally, representing 30-40% of the world’s malting barley trade and 20% of the feed barley trade. The demand for Australian barley is very strong due to its excellent quality and moderate protein content. It can be stored for an extended period and has low moisture content. The country produces over 9 million tonnes of barley per year and exports 70% of the total produces. Its main destinations are Asian countries like China, Thailand, Japan, Saudi Arabia, and Vietnam. However, the recent trade restrictions have changed the dynamics and prices barley trade across the country.

Before May 2020, China’s main source of barley used to be Australia, with more than 42.2% share in trade value in 2019. However, in 2020, the percentage fell to 19.3% as China imposed a tariff on Australian barley, which is expected to be applied for the next five years. Chinese importers are now importing barley from alternative sources: France, Argentina, Canada, and Ukraine due to increased trade regulations. Chinese importers are actively sourcing feed-grade barley and malt-grade barley from Argentina. Argentina's barley exports to China are projected to reach 1.5 million tons in 2021,24.7% more than the previous year.

Source: ITC Trade Map. HS Code: 1003.

Global barley price is increasing sharply as China turns to import the product from other countries after hitting Australia with steep tariffs. Barley prices (FOB) at Alberta port were $360/metric ton in the week ending on 10th May about 12% more than the prices recorded at the end of March and April. A tight supply of prominent barley-producing countries and increasing demand from China has pushed up the prices. According to the International Grain Council, Grains and Oilseeds Index, barley prices in France, Germany, Australia, the Black Sea region, and Argentina have increased by 33% between March 2020 and March 2021. In general, the barley index went up by 37% in June 2021 compared to the value in June 2020.

Source: International Grain Council

While China is driving up the global prices, Australia has found new homes for its barley. Saudi Arabia becomes one of the largest importers of Australian barley in the last year. The country uses the grain mostly to feed sheep, camels, and goats and imports roughly 6.9 million tons annually. Australian suppliers have managed to cope with the situation by opening up new markets in South America and the Middle East.