THE past three years have seen a sustained pace in barley exports from Australia.
Barley demand is still strong, while the wheat market has struggled with being competitive internationally.
Many traders have turned their attention to barley to fill nearby shipping stem commitments between now and mid-March.
Is this Chinese business intrinsic demand or can it be replaced by other origins?
The short answer is yes but there is a lot more to our national barley crop quality and varieties than meets the eye.
These days we see three distinct Chinese barley markets that are being supplied from Australia all at different specifications and price points.
The well-known FAQ market for malting barley has for many years now been seen as a reliable supply source for mainstream low price point brewing demand.
With protein and high test weights being critical to our barley making the grade year on year.
This puts the pressure back on the shippers to select stocks to export from a varied quality profile in each port zone to ensure contract specifications are met.
On the Malt 1 front, this year is shaping up a little more challenging given a large amount of Canadian malt 1 being bought in the past five months.
It is the first time for many years that we have seen landed China pricing of this barley below the Australian crop and given just how popular the Canuk varieties (Harrington and Metcalfe) are for premium beer productions it’s no surprise the quality/price of new crop northern hemisphere production namely French while being the key to our malting premiums post-June/July as it hits the market.
Domestically even in the poorest of years of quality and production, we see demand being met by interstate/inter-port zone shipping and logistics which will put a ceiling in the market behind malting plants where supply is not great.
Taking the above into account it goes a long way to explaining why we have seen a rally in feed prices while malting prices have remained steady, thus, narrowing the malt feed spread in most zones.
Why is our feed barley now sought after even at premiums to Black Sea feed and other origins?
It needs to be remembered that all varieties grown in Australia are two-row spring which is unique in that all other export
origins grow six-row winter and two-row spring predominantly depending on premiums being paid in the offshore growing areas.
Two-row Aussie preference given high fibre reasonable protein low screenings versus six-row and moisture content that averages four per cent year on year below that of northern hemisphere supply.
These factors keep buyers coming back for Australian feed.
Given where Saudi values are trading, it is a fantastic opportunity for Australian farmers and the industry to sell at higher prices than what was considered the world market (Middle East).