Barley becomes grist in the mill
Growers consider changing their cropping programs, switching to wheat as China threatens to impose tariffs.
Grain growers are pleased with the fantastic start to the season, but there is an increasing focus on the falling trend for new-crop prices.
The threat of tariffs being applied to Australian barley exports to China has seen some traders pull away from the barley market.
But other traders have continued to bid for new crop BAR1 grade barley at $250 a tonne delivered to Victorian ports for December delivery, a rate unchanged from last week.
Chinese imports of Australian barley are substantial with the five-year average at 4.2 million tonnes.
A trade dispute stemming from a Chinese inquiry into anti-competitive behaviour began in December 2018.
This combined with drought-limited Australian barley exports to 2.4 million tonnes in the 2018-19 season.
BAR1 barley is already trading at a historically high discount of $86 a tonne below Australian Standard White wheat, and further undermining of export markets could see this discount expand further.
Growers rarely consider changes to their cropping programs at this late stage but the timing of the threat of tariffs has some considering switching some paddocks from barley to wheat.
A price of $250 a tonne for BAR1 barley is at the 48th percentile of the past five years, just below the median price.
According to brokers, growers have been active sellers of new crop wheat.
The ASX futures for Australian Premium White wheat delivered January next year lifted $3.50 to $313.50 a tonne last week, and cash prices for new crop have followed with quotes of $312 a tonne delivered to Geelong or Melbourne.
Drought has changed the expectations of grain prices, but new crop prices are competitive compared to historical levels.
The new-crop APW wheat price is above the five-year median at a 62 percentile.
Traders and brokers are also bidding for a range of pulses for new crop delivery, which is rare at this time.
New crop nipper lentils have taken a significant fall from $825 a tonne delivered to grain packers in Melbourne last week to $705 this week.
Faba beans are quoted at $510 a tonne down $10 and desi type chickpeas are quoted at $680 delivered to Melbourne, down $15 a tonne.
Old-crop prices for ASW wheat and BAR1 barley are quoted at $381 and $295 a tonne, down $6 and $8 respectively, delivered to Melbourne end users.
Milling oats are $10 higher this week with trades around $520 a tonne delivered to Melbourne.
MORE GRAIN TALK
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