Race is on to find new markets for Australian barley

How much barley can Australia push into the Middle East?

Cropping
CHANGING MARKETS: In the wake of China's barley tariff decision this week, Australian industry attention is turning to other markets, such as the Middle East.

CHANGING MARKETS: In the wake of China's barley tariff decision this week, Australian industry attention is turning to other markets, such as the Middle East.

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China tariff decision this week prompts grains industry to explore diversity of markets.

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It has been very difficult of late to talk about anything in the grains market other than tariffs and barley - and rightly so.

The announcement by China this week left most in the market stunned and barley prices reacted accordingly.

Many industry participants retreated to the sidelines to buy some time to digest the news and adjust SnDs.

All of this in an to attempt to weigh-up what it meant for trade flows and longer-term price activity in Australia for commodities beyond just barley.

Up until the news regarding the tariffs, engagement from growers across most of New South Wales and Victoria was solid.

New crop sold percentages were at the higher end of the range for many years.

It appeared as though many were comfortable enough with the moisture profile and weather forecasts to get some new crop sales on.

This was despite an enormous inverse on cereals in east coast areas due to last year's failed crop.

New crop values in the first quarter of this calendar year spent most of the time in the top seventh or eighth percentile.

Old crop business continued to trickle through on just about everything - barring canola, which is very tight in those regions.

Demand on the export and domestic front has been mixed following recent market developments.

Many are now taking stock of a barley market that capitulated following the China tariff announcement.

Some new crop domestic business did get done after this, which suggests the bottom may have been found for the time being.

The question being asked by many was if tensions between Australia and China continue, and the tariffs do get imposed, how much barley can Australia push into the Middle East before Black Sea new crop?

It's been many years since Australia has exported significant volumes to the Middle East region.

There are questions about whether we can trade enough to solve what feels today is a very heavy SnD.

On the supply side, there is also a question remaining about how many hectares can, or will, switch out of barley.

Growers may be able to plant into another commodity as a result of the deteriorating gross margins for barley. This is question we won't know the answer to for some time.

On the weather front, most of NSW and Victoria are in a great position and soil moisture levels are at average or above average for this time of year.

The Bureau of Meteorology has been unwavering for some time in its forecast for the chance of exceeding median rainfall for the June to August period. The most recent BoM report had the chance at greater than 80 per cent.

It it had a similar forecast in May 2016, which proved accurate and beneficial for most.

Unfortunately, things are still looking dry in many parts of Queensland and it is hoped fortunes turn around through that region soon.

Similarly, the vast majority of the Western Australia cropping belt eagerly awaits some planting rainfall. Soil moisture levels through that region remain below average.

South Australia looks to be charting a very positive start to the season. Much of that state has above average soil moisture levels.

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