In W35 in the barley landscape, the International Grains Council (IGC) expects global barley production, consumption, and trade to decline in the 2023/24 season. This negative projection can be attributed to the climatic challenges affecting the Northern Hemisphere's barley crops, potentially leading to reduced yields and quality. In its Aug-23 report, IGC adjusted global production downwards by 2 million metric tons (mmt) to 143 mmt, the lowest in recent years, with significant reductions for Canada, Russia, and the European Union (EU).
Global consumption decreased by 1.3 mmt month-on-month (MoM), primarily due to lower projections for East Asia, Iran, Israel, and Tunisia. IGC also reduced global barley trade by 0.6 mmt due to sluggish demand from the EU and Saudi Arabia. The final global barley stock registered a MoM decrease of 0.4 mmt to 20.7 mmt, a nearly 16% year-on-year (YoY) decline.
China has already secured contracts for approximately 600 thousand mt of barley from Australia since the removal of anti-dumping duties on Australian grain. Traders confirmed the purchase of 10 shipments including both malting and feed barley. While grain volumes in Australia are currently limited, they are expected to significantly increase as the new harvest season approaches. Recent purchases included two to three lots of malting barley sold at approximately USD 325/mt cost and freight (C&F) and seven to eight lots of feed grain ranging from USD 277/mt to USD 280/mt C&F. One cargo of Australian barley has already set sail for China. Market operators anticipate increased demand for barley as a corn substitute in animal feed due to heavy rains in China damaging some domestic crops and causing price hikes.
Additionally, disruptions in Ukrainian grain supply to China resulting from the Russia-Ukraine war are further boosting interest in Australian barley. Around 20 shipments of Australian barley are expected to reach China over the next two to three months. This follows China's decision to abolish the 80.5% import duty on Australian barley on August 5.
Lastly, the barley market in Russia faced challenges such as overstocking by exporters in the ports of the Azov-Black Sea basin and a slowdown in shipments in W35. These obstacles hindered the barley purchase price recovery to fair levels. With a substantial gross harvest in 2023, especially in the south region, exporters will likely maintain lower prices due to perceived oversupply. This situation is typical during the export season’s initial three to four months. Therefore, the immediate price increases to parity levels are not anticipated. However, as excess stock in ports gradually diminishes, there may be a gradual price uptick in the market, especially during the high water period, which currently accounts for over 80% of all barley export shipments.