High tariffs placed by China on Australian barley
Strained diplomatic relations between Australia and China, the world’s leading barley importer, led to China placing an 80.5% tariff on Australian barley. This tariff was placed in May 2020 and is set to remain in place for 5 years. Australia is currently China’s biggest barley supplier AUD 1.5 billion to AUD 2 billion (USD 980 million to USD 1.3 billion). However, the tariff has hindered barley trade between the two countries.
China seeks alternative barley suppliers
Top Barley Importing Countries (Unit: USD)
Source: Knoema
Due to the high tariff on the Australian barley, China has shifted its focus to other key barley producers, such as France, Canada, Argentina, and other European countries. Approximately 1 million tonnes of Canada’s 2021 barley crop has already been booked by Chinese importers, along with at least 1 million tonnes of Europe’s new barley crop, mainly produced by France and partly from Ukraine. The shipments are expected to be fulfilled between July and September this year.
These advance sales from France have caused the export premiums for France’s summer barley crop to rise, and as a result, the feed barley prices leapfrogged the bread wheat prices, which is an unusual occurrence. This has also added tension to the French market, as a sharp drop in upcoming spring barley sowing is also expected, following a high sowing level from the previous year. French wheat exports are also set to be eclipsed by barley exports this season. While French wheat exports reached 1.5 million tonnes in the first half of the season, the expected wheat sales for the rest of 2020/21 seasons seems blurred, and there are no new-crop deals confirmed for the rest of the season since the wheat crop was affected by adverse weather in fall 2019, aphid’s infestation, and moisture stress.
China set to import record barley imports
Chinese barley imports are expected to reach record-high levels this season(2020/21), surpassing the value of USD 1.56 billion that was imported last season (2019/20). The International Grains Council (IGC) estimates that Chinese barley imports for 2020/21 will reach 5.8 million tonnes. The U.S. Department of Agriculture (USDA) foresees 7 million tonnes, while other industry analysts expect the figure to exceed 10 million tonnes. French barley imports until the June of the 2020/21 season have reached 1.8 million tonnes, exceeding the 1.5 million ton total from the same period last season. Shipments from Canada reached 1.5 million tonnes from August to December, matching the previous season’s total volume.
Sources:
Reuters. “UPDATE 1-China's appetite for barley sucks in French and Canadian new crop.”
Reuters. “China hits Australia with barley tariff in latest blow to relations.”
Nasdaq. “China's appetite for barley sucks in French and Canadian new crop.”
Hellenic Shipping News. “China’s appetite for barley sucks in French and Canadian new crop.”
Knoema. “Barley imports.”