THE past three years have seen a sustained pace in barley exports from Australia thanks to strong demand, compared with the wheat which has struggled to be internationally competitive.
Can this Chinese business be replaced by other origins?
The short answer is “yes”, but there is a lot more to our national barley crop quality and varieties than meets the eye.
These days, we see three distinct Chinese barley markets that are being supplied from Australia, all at different specifications and price points.
The well-known FAQ market for malting barley has for many years now been seen as a reliable supply source for mainstream low price-point brewing demand.
With protein and high test-weights being critical to our barley making the grade year on year, this puts the pressure back on the shippers to select stocks to export from a varied quality profile in each port zone to ensure contract specifications are met.
On the Malt 1 front, this year is shaping up to be a little more challenging, given a large amount of Canadian Malt 1 being bought in the past five months.
It is the first time for many years that we have seen landed China pricing of this barley below rates for Australian barley, and given just how popular the Canuk varieties of Harrington and Metcalfe are for premium beer production, it’s no surprise.
The quality and price of new-crop northern hemisphere production, namely French barley, as it hits the market will be the key to our malting premiums post June/July.
Domestically, even in the poorest of years of quality and production, we see demand being met by interstate and inter-port zone shipping and logistics, which will put a ceiling in the market behind malting plants where supply is not great.
Taking the above into account and it goes a long way to explaining why we have seen a rally in feed prices while malting prices have remained steady, thus narrowing the malting-feed spread in most zones.
Why is our feed barley now sought-after, even at premiums to Black Sea feed and other origins?
It needs to be remembered that all varieties grown in Australia are 2-row spring, which is unique in that all other export origins predominantly grow 6-row winter and 2-row spring varieties, depending on premiums being paid in the offshore growing areas.
The preference for 2-row Aussie barley lies in its high fibre, reasonable protein, and low screenings over 6-row, as well as moisture content that averages 4 per cent year-on-year below that of northern hemisphere supply.
These factors keep buyers coming back for Australian feed.
Given where Saudi values are trading at, it is a fantastic opportunity for Australian farmers and the industry to sell at higher prices than what was considered the world market centred on the Middle East.
Source: COFCO International