W20: Barley Update

In W20 in the barley landscape, global barley prices continue to follow movements in the wider grain complex, with larger feed grain supplies forecast for the new season, resulting in a neutral price outlook for the next two weeks and a bearish view over the next 2-6 months.. FranceAgriMer forecasts French barley exports to destinations outside the EU in the 2022/23 season to reach 3.4MMT, an increase of 0.2MMT per month due to the recent increase in grain sales to China. Like other parts of Europe, France has had regular showers since March, which have boosted soil moisture after a dry winter. Wet, chilly, and overcast weather has caused some concern in May over risks to crops in the northern plains of France, though a sunny and warm end to W20 should help plants. Therefore, the good/excellent rating for winter barely dropped 2% points in W20 to 90%. The corresponding spring barley rating was unchanged from the previous week at 95%.

The Ukrainian area sown under winter barley for the 2023 harvest is expected to reach the lowest level in recent years, having totaled 675.7K ha in 2022. Meanwhile, the Ukrainian 2023 barley production is expected not to surpass 6MMT since the decline in barley production is a global trend. The main importers of barley, China and Saudi Arabia, are expected to reduce grain purchases. Currently, new crop barley from France is being offered in the range of USD 244-248/MT on FOB terms. In the Romanian port, the price tags for new harvest barley for delivery in July are at the level of USD 190-195/MT. Ukraine still has stocks of the old barley harvest, with an indicative price of about USD 175/MT, but there is practically no trade. For cash, the old crop can be sold in small river ports at very low prices of USD 140-145/MT, which is not economically feasible, thus, the movement is minimal. In April-May, the barley trade always slows down in terms of activity. The situation on the barley market may improve during the harvesting of the new crop and the extension of the grain corridor on the Black Sea. Futures for the new harvest of Ukrainian barley are currently not contracted.

The Russian barley situation as of May 19th has not changed for more than two months. The drop in liquidity is also characteristic of the global market, in particular, in the case of the EU and Ukraine. Nevertheless, with the beginning of the new season, there is an expectation of an increase in the interest of importers, which may support prices in Russia. However, for the next month at least stagnation tendencies will prevail. The Russian export duty on barley fell from USD 33.39/MT to USD 26.42/MT, based on an indicative price of USD 215.9/MT, and is expected to be valid until May 23rd. The Center for Grain Quality Assessment reports that, in MY 2022/23, from July 1, 2022, to May 11, 2023, Russian barley exports amounted to 5MMT, up 1.5 times, with shipments mainly destined for Kazakhstan (0.6MMT) and China, each setting a record volume. For the first time, barley was shipped from the Irkutsk region in Russia, while Cyprus and Tajikistan resumed imports of Russian barley. Lastly, APK-Inform reports that, in March 2023, Kazakhstan barley exports to China and Iran reached about 50K MT and 29.58K MT, up 69% MoM and 10.7% MoM, respectively. In the first 7 months of the 2022/23 season, Kazakhstan barley shipments to Iran and China amounted to 343.91K MT and 235.54K MT, respectively, indicating that Iran remains the top importer of Kazakh barley and China takes the second position in the current season.