Other markets needed to counter barley tariff threat
China trade dispute dampens prices while outlook for wheat looks bearish.
With the planting of crops nearing completion, Chinese tariffs and bearish new cropwheat prices are overshadowing the positives of the early break.
The challenges for barley exports are substantial given the crippling 80.5 per cent import tariffs imposed by Chinese authorities this week.
The impact of this will be felt by traders who are yet to ship cargoes sold to Chinese malthouses in the coming months.
Other markets will need to be found for this barley in a world market flushed with cheap corn and new crop malting barley from Europe and Canada.
Some growers and traders also retain unsold stocks as they had hoped barley prices would rise.
Prior to the confirmation of the tariffs, the market has been cautious and prices are lower.
On Monday this week prices for BAR1 grade barley stored in the central handling system had fallen $40 a tonne to $237 delivered to Victorian ports less freight to silo. Other regional markets had also fallen heavily with the Griffith market back $30 a tonne from last week to $255 and the Goulburn Valley market slipping $40 to $253 a tonne.
Barley pricing in South Australia is even more difficult as bids are tough to find.
Prior to the announcement new crop barley prices had fallen to a lesser extent with BAR1 quoted at $230 a tonne delivered to Victorian ports less freight to local silos, back $20 from last week.
The dependency of China for sales of malting barley is apparent by the lack of any old or new crop premiums for malting barley over BAR1 grade barley.
Growers in the northern Mallee and NSW who received the rains earlier have generally completed planting their cereals, however some growers in the southern Mallee and Wimmera have changed a few paddocks out of barley and into wheat.
The price outlook is also looking bearish for Australia’s largest crop. December wheat futures in Chicago fell $12 a tonne last week pressured by improving conditions in the US, Russia and the Ukraine.
Last week’s estimates released by the USDA revealed a greater increase in global carry over wheat stocks triggered by increasing production in Canada, Russia, Australia and Argentina. With US corn prices at 13-year lows, corn is capturing a greater share of the feed market, further diminishing demand and prices.
January ASX futures fell $12.50 a tonne to $301 and new crop cash prices for Australian
Premium White wheat fell $17 a tonne to $295 a tonne delivered to Victorian ports.
Fortunately, growers have been active in the new crop markets, with many pricing a small portion of their anticipated production of wheat, barley and canola.
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