Malt barley? I barley know her! Feed barley is back in as prices soar up to priced at $214.50 USD / metric tonne (or $4.67 USD and $6.04 CAD per bushel) for delivery into Melbourne.
As prices for wheat and corn prices get too pricey for buyers, they are opting for feed barley, increasing global demand. The one million tonne tender by Saudi Arabia and the rapid need for feedstuffs in China are all soaking up global stocks, and lifting the barley price up.
China’s pork and poultry consumption make it the biggest importer of Australian barley. This is technically a good thing for the Australian barley market but it’s also competitive with that which is getting exported out of Canada.
Flipping gears, malt barley at Melbourne is at $205.14 USD / metric tonne (or $4.47 USD and $5.78 CAD per bushel).
If you’re doing the math, that’s about $10 USD / tonne lower than feed barley right now.
At these levels, you know that Australian barley acres going up: this is something that Brennan mentioned in Tuesday’s Breakfast Brief, as well as something that we’ll be digging into later this week.
Keep in mind that one of the other things supporting higher acreage and current feed barley prices is the Australian cattle industry. It’s been suggested that the herd size in the Land Down Undaa could expand by as much as 10% in 2018!
Ultimately, although there was a drop off in acreage last year, it is predicted to go back up again. Thus, while feed barley prices are fairly strong right now, acres will chase these prices.
It’s a similar dynamic in the Great White North as 2018/19 Canadian barley acres are expected to jump 7% year-over-year to nearly 6.2 million acres. This is technically below the five-year average of 6.33 million acres, but a clear reversion to the mean is happening.
Ultimately, as global demand for barley is sitting fairly strong, the prices are also going to be strong. It’s a pretty simple equation.
Feed barley price outstrips malt barley
THE premium for malt barley has vanished as demand for feed barley surges.
Feed 1 delivered to Melbourne hit $275 a tonne last week and remains at that level this week, well above the $263 a tonne being paid for malt barley.
Jumbuk Ag consultant Colin Peace said that there was a “massive shortage of feed barley”.
“Worldwide there are tight balance sheets and in Australia it’s exacerbated by northern demand for cattle on feed in NSW and Queensland.”
Mr Peace said many growers sold feed barley straight off the header instead of warehousing it due to rising prices.
Emerald chief executive officer David Johnson said the lift was driven by global demand including a one million tonne tender by Saudi Arabia for May shipment.
While the feed grain will be supplied by the European Union, it “tightened” the global feed barley balance sheet, he said.
He said the feed price lifted $US25 a tonne in response.
Mr Johnson said he expected to see more feed barley planted this year as a result of the positive prices.
“There was a reduction in barley planted following the 2016-17 crop, but I would expect to see an increase in acreage in response to the price,” he said.
“I don’t see them (prices) easing off.”
Last month, Emerald loaded a new bulk carrier, Nord Colorado, at the Port of Melbourne, with feed barley destined for China on its maiden voyage.
Mr Johnson said the bulk carrier was loaded with 50,000 tonnes of feed barley and it was the tenth cargo of this size bound for China in 12 months.
He said the demand from China had grown rapidly as it was now the biggest buyer of Australian feed barley.
“It’s driven by pork and poultry consumption,” Mr Johnson said.
Rabobank global grains expert Stefan Vogel said the EU was the biggest producer of barley, growing 60 million tonnes a year with most of it going to feed in the EU or Saudi Arabia.
Mr Vogel said corn and wheat prices were rising leading to more demand for barley as a substitute.
“With wheat prices increasing in the US in the past six or seven weeks, then it’s easy to replace barley in the mix.”
Australian Standard White wheat, delivered to Melbourne, is fetching $280 a tonne.