Implications of Ukrainian-Russian tensions on global barley trade

Supply Chain Management
Global barley exports are projected to reach 34.7 million mt in MY 2021-22, down 2 million mt YoY, but 5 million mt more than in MY 2019-20. Ukraine and Russia account for 30% of global barley exports. The 2021-22 export potential may not be strongly disrupted, as with wheat and other coarse grains. However, Ukraine’s barley sowing is likely to be affected by the current military activities. 55% of all the sown barley in Ukraine is a spring crop.

Barley could become another ‘hostage’ of the Russian invasion. However, compared with corn and wheat, the outcomes of the current conflict in the Black Sea basin may not be so severe in the current season, but it will be affected in the next marketing year. Most of the barley trade in the mentioned region happens in the first half of the season, with exporters focusing on selling other crops in the second half of the year. Ukraine’s barley exports reached 5.57 million mt in July 1-February 21, 2021-22, corresponding to 96% of the forecasted shipments. Russia shipped 2.9 million mt of this grain from July 1 to March 10, 2021-22, accounting for 65% of the projected shipments.

Source: FAS USDA

While the fears of further supply disruptions from Ukraine and Russia are growing, barley importers are trying to boost shipments from alternative sources. Australia possesses the world’s most significant barley export potential in MY 2021-22. The country’s barley output is projected at a record 13.7 million mt in the current season, 5% more than the 2020-21 level. Exports are pegged at 9 million mt, up to 1 million mt YoY. Despite the positive outlook, Australian barley export prices rose by 7% in the W2 March 2022 to USD315/MT FOB Adelaide. It was also 43% more than in the same week last year.

Slightly higher export prospects for Canada’s barley exports will also relieve the current tight barley supplies. USDA pegs Canadian shipments at 1.8 million mt this season, 200,000 more than the previous report. The initial crop outlook for the next season also looks promising. Agriculture Canada forecasts barley harvest at 10.6 million mt in 2022-23, 52% up from the current disastrous season’s harvest.

While the high export potential of the abovementioned states will help ease the supply situation in the short run, the 2022-23 global export potential might still be at risk. Because of the war in Ukraine, local farmers may not be able to sow spring barley, which accounts for 55% of the total acreage. In addition, 70% of the area is concentrated in the southern and eastern regions of Ukraine, where the war activities are the most widespread.

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