April 6 – New Record For Canadian Malt Barley Exports

Canadian barley is continuing to be exported to China at record amounts. It is projected to hit 1 million tonnes this year.

Canadian barley is continuing to be exported to China at record amounts. It is projected to hit 1 million tonnes this year, shattering the record 800,000 tonnes of 2017. 

In February, Brennan mentioned that China will continue to increase barley imports, but only if the price is right. The low barley production number in Australia have made Canadian barley price-points much more competitive than in years past. 

2018-04-04-china-barley-imports-by-country

Brennan also reported in February that barley acres were going up. However, there are some questions about whether Canadian barley exports will remain internationally competitive, “especially if the Canadian Loonie gets back above $0.85 USD.”

Another consideration is quality since most of the demand is for malt barley.

Western Canada had a record crop for quality, with a 65-70% selection rate for malt. On the other hand, Australia had a low-quality crop year due to rainfall during harvest. 

Feed barley prices are rising higher, while malt barley prices aren’t, meaning many farmers are choosing to sell their malt-quality barley as feed. And why wouldn’t you if you are getting the liquidity for a very similar price point as something that you’ve been waiting to move for the past 5 months!?

That being said, Canadian malt barley exports to China alone should indeed top 1 million tonnes, a new record. The previous record was set last year, with just over 800,000 tonnes.

Right now, Canadian barley exports are continuing to trend higher, thanks to Chinese demand.

But, that trend may not continue next year if Australian output and quality increase. Expectations are from ABARES are that Australian barley acres in 2018/19 will creep up to 10 million acres again and production will top 9 million tonnes.  

However, Canada has proven its consistent crop quality and may should its presence in Chinese barley markets. China is a very price-sensitive market though. With potential tariffs on US soybeans on the way though, China will need to get every single possible tonne of feedstuffs it can to replace the lost soybeans. 

 

Canadian barley exports expected to shatter 2017 highs

China is likely to break last year’s record barley imports from Canada, but while most of that demand is for malt quality, it’s feed prices that are firming—enough even to draw malt barley.

“Exports of malting barley to China are projected to be a record, set to exceed one million tonnes,” says Peter Watts, managing director of the Canadian Malting Barley Technical Centre. “Last year it was about 800,000 tonnes, which was also a record.”

China bought 891,000 tonnes of Canadian barley from August 2017 to January 2018, Statistics Canada data shows. That’s 85 per cent of Canada’s total barley sales, and over double year-ago figures.

Malt quality

“The exports to China are virtually all malting barley,” says Phil de Kemp, executive director of the Barley Council of Canada. “That’s a result of some of the difficulties that Australia had.”

Australia grew a more average sized crop in 2017 of eight million tonnes, well off its record 13.4 million the previous year.

And while rainfall during Australia’s harvest impacted quality and top-grade malt barley availability, Western Canada harvested its best malting barley crop since 2013, with selection rates running 65 to 70 per cent, CMBTC previously reported.

Prices

Agriculture Canada’s latest outlook reports that Lethbridge barley prices in March jumped close to $20 a tonne to a crop year high.

“Strong feed barley values have definitely resulted in quite a lot of malting quality barley being sold into feed channels,” Watts says.

Owing to strong supplies in North America, domestic malt barley prices haven’t increased by the same extent as feed barley, Agriculture Canada notes.

The department adds that Canadian new crop malt barley prices were only slightly higher than 2017‑18 as the domestic barley inventory, like that in the U.S., is of high quality.

Curtailed Chinese demand

De Kemp doubts China’s thirst for Canadian malt barley will maintain this year’s rocket pace, especially if Australian output bounces back. But this year’s opportunities were useful in establishing a presence with new purchasers.

They would have seen for themselves the benefits of using Canada’s higher protein malt barley, de Kemp says. Adjunct brewing requires higher protein, and China prefers malt barley protein of 11.5 per cent or higher, which Canada consistently produces, he points out.

Bottom line

High North American malt barley supplies offset bullishness of record Canadian exports to China, a sales pace very likely to slow down.

H/T: FCC
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Lucia Larsen