SAUDI Arabia’s Saudi Grains Organization (SAGO) has bought 660,000 tonnes of feed barley at US$277.65 per tonne cost and freight.

Barley bagging near gulf port of Dammam, Saudi Arabia. photo Albawardi.

Its latest tender last week called for offers on eight 60,000t cargoes, but SAGO surprised the market by booking 11 cargoes. Glencore’s Viterra, the heavyweight in South Australian procurement and bulk handling, will supply six.

Eastern Australia’s GrainCorp, Western Australia’s CBH Group, Bunge, COFCO and Aston each will supply a cargo.

The previous tender, in November, was booked at prices in the mid $230s.  Today’s news is a 20-per-cent lift in values, which is good for growers around Australia and reflects globally strong feedgrain prices.

Rising tide lifts all boats

Australia will likely become the number one supplier to Saudi Arabia this year.

Compare that to its position as number five or six over the past decade with major suppliers EU, Russia and Ukraine alongside lesser-volume suppliers Canada and Argentina.

Australia’s “normal” low ranking in Saudi arose because of the pre-eminence with premium barley sales to customers in China, Australia’s number one destination over decades. Both rankings reflect the relative returns in each trade.

Australia has a lucky break because this year it’s the global feedgrain markets that have attracted mounting premiums, and the timing has coincided with Australia having plenty to sell.

“With what’s happened in the corn market, over the past three or four months, Australian barley has become the cheapest feed grain,” Advantage Grain pool manager Chris Nikolaou said.

“A rising tide lifts all boats.”

In the absence of China as the primary destination, Australia is now sending barley all over the world.

“To be over-reliant on one buyer, and the fact that so far this year we have been able to have a lot more destinations on the sales books, makes for a much healthier marketplace.”

Saudi buying 660,000t in recent days is evidence of price competitiveness.

“It looks like the pricing in the Saudi business was based on Australian this time.”

Black Sea origin possibly could have been competitive for some cargoes into Red Sea ports but it would seem tight supply and risk from Russia’s export duty could have made shippers hesitant to make firm offers.

Russia this week increased export tariffs on wheat and levied a  €10/t barley tax.

Barley bright

Post drought and post the damage to Australian barley of China policy, things are looking up for barley.

WA and SA barley has capitalised on strong shipping demand over the first half of the marketing year, and eastern-states producers have benefitted as well.

“It’s great for the growers in Victoria and New South Wales who have had a cracker season; they get the best of both worlds – big crops and big demand.”

NSW in particular was hurt by low volumes during the drought, but its 2020 barley crop at 2.3 million tonnes (Mt) has eclipsed preceding crops when only 300,000t was grown in 2018, and 500,000t in 2019.

Grain Central: Get our free daily cropping news straight to your inbox – Click here