After a 12-month wait, news was forthcoming last week on China's investigation of alleged Australian dumping of barley in their market.
In what is not a surprise, China announced the investigation would continue for another six months (as is permissible under the World Trade Organisation anti-dumping investigations protocols).
While an announcement that the investigation was being abandoned would have lifted our export zone pricing, it will take more than the investigation being lifted to return Australia's barley exports to China to the buoyant pre-2018 volumes.
The first and most obvious hurdle is for Australia to return to average grain production. After now three years of below to well-below production, we will need at least an average harvest volume in 2020 to trigger a significant uplift in feed barley exports to China.
This will be, not least of all, to return Australian barley pricing to competitive international levels, something that will be hand-braked as parts of the country undergo stock rebuilding.
And that price competitiveness will be all the harder to achieve over the year ahead as global production is forecast up year-on-year.
Increased planting and better seasonal conditions mean that the United States Department of Agriculture currently has barley production pegged at almost 156 million tonnes for 2019/20, up 12 per cent year-on-year, and stocks to grow by 20pc.
Increased production from lower cost producers Russia and Ukraine will add to downward price pressure.
But the competitive pressure is broader than just global prices. It's about access too. China has been actively expanding its barley supply options. This has included the negotiation of phytosanitary access permits for Kazakh and Russian barley and increased imports from the European Union.
However and more significantly, Chinese domestic dynamics are contributing to the Chinese barley 'bear' being bigger than the dumping investigation.
Chinese growth is slowing and expected to slow further over coming years.
An inevitability as far as the development of economies goes, this is being further subdued by on-going US-China trade war distortions. Overlay this with the removal of much of China's production support that led to very high-priced Chinese corn - along with the relatively favourable price of landed Australian feed barley as a feed alternative - and the drivers of pre-2018 demand are no longer in place.
For this year and next at least, lower feed demand in the wake of African Swine Fever will also subdue demand somewhat.
China's corn stocks have fallen, reportedly by close to 8pc since 2016/17, and this may support the Chinese corn price into the future.
The other dynamic that may assist is that in the post-ASF rebuild of China's protein production base, we will see consolidation and the growth of more commercial pig operations, an increase in poultry production and the location of these in south eastern regions in China - further from the northern corn-growing regions and closer to ports that can deliver Australian feed barley.
This will provide a shift in the relative pricing of corn and imported Australian barley. These, however, are mid-term demand factors.
As such, we can expect bearish Australian barley market sentiment over the next 12 months even if no dumping penalties are put in place before, or on, the WTO deadline for the investigation in May 2020.
