March 23 – Saudi Arabia Looking For Another 1 MMT of Barley

Saudi Arabia is looking for another million tonnes of barley, despite higher prices (including being more expensive than wheat!).

Saudi Arabia is looking for another million tonnes of barley. This despite prices continuing to climb on tighter world supply and it being priced higher than wheat!

On Friday, they announced another tender, looking for another 1 million tonnes of barley. At the time of writing, this 17-ship purchase was not finalized.

Worth considering though is that the last barley purchase that Saudi Arabia made was priced at at an average of $243.47 USD / metric tonne (or $5.30 USD and $6.90 CAD per bushel)

Since then, barley prices have increased 4.4% in Russia and 1.9% in Australia, two of the main origins of barley. 

The SAGO market report showed the following in terms of pricing:

• Russian barley prices at $238.30 USD / metric tonne (or $5.19 USD and $6.75 CAD per bushel),
German barley prices at $244.30 USD / metric tonne (or $5.32 USD and $6.92 CAD per bushel)
• and Australian barley prices at $267.80 USD / metric tonne (or $5.83 USD and $7.59 CAD per bushel).

However, despite Saudi Arabia continuing to purchase barley at rising prices, overall its barley demand is slowing.

What’s replacing it?

Corn.

And price is the big reason. 

The USDA’s attache in Saudi Arabia is forecasting total barley imports in 2017/18 to shrink by 14% to 8 million tonnes.

For 2018/19, the Ridyah-located attache is forecasting the barley imports number to drop to 7.5 million tonnes.

On the other hand, corn consumption is forecasted to increased by 12% to 4.45 million metric tonnes in 2018/19. This includes 4.4 million tonnes of imports. That’s up 29% year-over-year! 

Why the change?

Feed barley has been popular among Bedouins (rural/nomadic Arab people), while local livestock feed has been mainly corn.

However, Bedouins are increasingly turning to corn, as the better option for nutrition and price.

This hasn’t happened overnight though.

From 2012/13 to 2016/17, Saudi Arabian corn imports have increased by 88%. 

While Saudi Arabia will still be a major player in the barley market, it’s making a bigger splash in the corn market in the year ahead.

 

Saudi Arabia back for 1 million mt of barley despite rally

Saudi Arabia’s state grains buyer SAGO is back in the market, looking for 1.02 million mt of wheat for delivery May 13-June 30, market sources said Thursday.

SAGO is looking for a total of 17 cargoes, with the tender expected to close Friday, with the results released early next week.

At its previous tender in mid-February, SAGO paid an average $243.47/mt CFR for 960,000 mt.

Barley prices have spiked over the course of the 2017/18 marketing year as tight supply has pushed feed barley to trade at a premium to milling wheat – almost unheard of in the trade.

Since its last tender, Agricensus’ barley assessments have shown Russian barley prices increasing 4.4% to $219/mt FOB Novorossiysk and Australian prices increasing 1.9% to $240.25/mt FOB Western Australia.

SAGO’s own market report issued Tuesday showed the delivered price of Russian barley equivalent to $238.30/mt CIF Saudi Arabia, German barley at $244.30/mt, and Australian at $267.80/mt.

H/T: Agricensus
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Lucia Larsen