W21: Barley Update

In W21 in the barley landscape, projections for the 2023/24 global barley harvest are bearish in terms of production volume, which would result in final stocks adjusted to levels not seen since the 1980s and would place the barley system in a fragile situation in the face of climatic and/or political/economic events that affect any production area. The USDA forecasts global barley production in the 2023/24 season at 147MMT, down 4.5MMT compared to the 2022/23 barley crop. In Argentina, for the 2023/24 campaign, experts estimate that the planting area will be somewhat less than that of the last two years, at around 1.0-1.1M ha, an area that under normal conditions would give a production of 4.1-4.5MMT. The two-month extension of the Black Sea corridor favors grains such as corn and wheat, while barley will continue to go mostly to Western Europe by land. On the other hand, analysts anticipate an increase in grain trade between Russia and China, by land, which would include greater shipments of barley.

In the week ending May 22nd, EU barley exports remained slow at 6,214MT, with shipments mainly made by Denmark at 4,867MT (78%), France at 591MT, and Germany at 309MT. Since the beginning of the 2022/23 season, EU barley exports amount to 5.82MMT, down 15% YoY, with China purchasing 2.07MMT, at a 36% share of total yearly shipments. So far in MY 2022/23, EU barley bookings were made by Saudi Arabia (1.16MMT), Jordan (465.55K MT), and Tunisia (380.9K MT). France has had regular showers since March, which have boosted soil moisture after a drought in the summer of 2022 and an unusually dry winter. A sunny, warm spell in W21 is expected to help crops in key northern plains in France following a wet, chilly start to May 2023, though French traders are still wary of renewed dryness. Thus, the good/excellent ratings for winter and spring barley were also unchanged from W20, at 90% and 95%, respectively. In W20, Ukrainian farmers sowed 585.2K ha of grain and pulses, most of them in the Chernihiv region at 94.5K ha, but the Poltava region planted the most spring crops so far at 626K ha. Of the total planted area of 5.278M ha, Ukrainian spring barley accounts for 763.3K ha.

Russian barley export prices remain extremely low and significantly underestimated compared to the parity level. This is due to the extremely low demand against the backdrop of significant volumes of supply in the Russian market. However, the estimated level for the new Russian barley crop indicates a significant opportunity for price increases. Most likely, from June, the contracting price of the new Russian barley crop will increase, which allows Russian exporters to expect prices to rise to more acceptable levels. Lastly, the Kazakh Ministry of Trade indicates that Kazakhstan has great potential for barley exports, which can reach USD 308M per year, including USD 166.3M to Iran and USD 87M to China. In 2022, Kazakh barley export value amounted to USD 215.27M, up 30.5% YoY, with Iran accounting for more than 55% at USD 119M, China for 26% at USD 56.2M, Uzbekistan for about 10% at USD 21M, and Tajikistan for 7.5% at USD 16.1M. In the January-April 2023 period, Kazakh barley export value reached USD 83.5M, with China accounting for about 48%. Given the significant reduction in barley imports in China from Australia, and Ukraine, as well as a likely reduction from Europe and Canada, Kazakhstan has a great opportunity and is ideally positioned to increase exports to China.