BARLEY exports from Australia are about to get a new-year boost as Saudi purchase prices begin to synchronise with Australian feed barley export values.
Historically an important market for Australia’s second-ranked cereal crop, Saudi Arabia is likely again to join China, Japan and the Gulf States as a volume destination for Australian feed barley.
Saudi Arabia bought around one millions tonnes this week from eight traders, optional origin, for arrival January, February and first half March 2017.
The last time Saudi imported anything more than a handful of Australian barley was in 2013-14, when it purchased 1.2Mt. That year was Australia’s record barley export season, when 6.3Mt in total was shipped, mostly to China.
The barley traded at US $178-$192 c and f, and with the Australian dollar trading at below US 75 cents, trade sources are confident a significant amount of Australian barley will help supply the Saudi order.
Two birds in the hand
“The key here is that the Saudi Arabia feed barley demand will now join China’s ongoing feed barley demand as an outlet for Australia’s export feed barley,” Lachstock Consulting’s Lachlan Hume said.
“It can make a big difference to barley prices to have not one, but two, potential export outlets for feed barley.”
Rejuvenated demand from Saudi has been welcomed in the face of supply-side pressure from the Australian barley harvest, which is now about three-quarters complete.
“This purchase by Saudi puts a floor in the market; it brings a demand story to what had otherwise been a drifting market,” he said.
Background: Saudi Arabia bought 11 Mt of barley last year, with around 5pc from Australia and more than 90pc from Black Sea origins, Europe and Argentina.
Barley is used as animal feed throughout Saudi Arabia. The government administers sales prices to Bedouin of barley which is carted (traditionally in bags) to desert areas to feed mainly sheep and camels.