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BARLEY MARKET REPORT

Jan 9, 2019 - The Canadian barley export market continues to be very vibrant, with exports from August 1 – December 31 at 954,000 tonnes (T). This compares with 772,000 T last year at this time and the five-year average of 519,000 T.

China continues to be the most dominant buyer, importing over 500,000 T since August 1 of feed and malt barley, the majority being malt. Our second largest customer was Japan (136,000 T) and then Kuwait and the United Arab Emirates (UAE) (105,000 T of feed barley).

There will be more sales executed through January forward and China remains a buyer of malt barley for positions April through the summer months, providing Western Canada has sufficient barley to market.

Canadian malting barley sales now are primarily focused on the domestic market, which purchases roughly 900,000 T per year, and the export market that is dominated by China. The United States (U.S.) market, which in the 2000s bought over 250,000 T per year, has significantly cut its imports of Canadian barley in recent years. This past year, with the Buy America campaign, they are contracting virtually no malt barley from Canada.

On the feed barley export side, with Canada excluded from trading into Saudi Arabia, other destinations have emerged this year such as Kuwait and the UAE. Reduced barley export supplies from Australia and Russia this year are creating opportunities for Canadian global feed barley trade.

The domestic feed market continues very strong and feed is now trading in the $251 T-range for January. A limited amount has traded into June at $258 T. A combination of the feed usage and good export demand is projected to take Canada's barley carryover down to 1 million T, a number unheard in the Canadian Wheat Board days as they protected the market and would not permit the carryover to dip to these tight levels.

On the export malt barley side our biggest competitor is Australia, which to the end of December had traded 5.4 million T of barley into China and shipped 6.1 million T for the 2016/17 crop year, during which China imported 8.9 million T. However, a recent anti-dumping suit investigation launched by China into Australian feed barley may preclude Australia from shipping additional barley stocks to China this year. This would potentially give Canada an opportunity to export more barley to China in 2019. However, given that China imports nearly 70% of its barley from Australia, this issue should get resolved quickly. Australia, similar to Canada, is not known for purposely selling grain under world values.

Europe had crop issues this year and so is not a major competitor on the global malting barley market. Recent rains have helped alleviate dry conditions that affected parts of eastern and Northern Europe last summer, and have boosted river levels which is helping with the intra-European Union barge movement.

After harvest delays due to rain in December, Argentina had harvested 88% of its barley crop as of January 2 and the early forecast had been for a 3.8 million T crop. However, if yields continue to surprise to the upside, crop production could reach 4 million T which would be a 9% increase over last year's production. Early indications suggest higher than average protein levels (e.g. 11%). Argentinian farmers only seed malt barley varieties, the major one being Scarlett. Argentina traditionally supplies other South American countries with malt barley, especially Brazil and Colombia. For the past four years Argentina has averaged over 2.5 million T of exports, mostly malt barley into South America with some feed and/or malt going to China and some feed barley going into Saudi Arabia.

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