Australia: China lifts barley, dry lifts wheat

China’s return as a buyer of Australian barley has lifted the northern market by $20 per tonne, but done little to shift values in the south.

The northern wheat market has lifted $25/t as dry conditions, already of concern in the northern half of New South Wales, creep into Queensland, and the plains and outer slopes of south-central NSW.

According to a joint statement from Federal Minister for Trade Don Farrell and Federal Minister for Agriculture Murray Watt, China yesterday announced it has re-registered CBH Grain and LDC’s Emerald Grain Australia for barley exports, effective immediately.

The companies now join the other 126 other Australian exporters registered to supply barley to China in a market which has reanimated based on China’s removal of tariffs that were in place since 2020.

“The reinstatement of these two exporters is the result of ongoing technical discussions between our two countries, and follows last week’s confirmation that China would remove duties on Australian barley,” the statement said.

Table 1: Indicative prices in Australian dollars per tonne.

Trade sources say one to two cargoes per month of Western Australian barley have been arriving in Brisbane since June, and the business is booked to continue until June next year.

The trade started because of lacklustre export demand for WA feed barley, and because the Qld-northern NSW market, where Australia’s beef feedlots are concentrated, has been paying $60-$80/t and more in places than the south, with its small local 2022-23 a factor.

Following China’s removal of its tariff on Australian barley, Flexi Grain pool manager Sam Roache said in his commentary on Australia’s latest barley export figures that current and new-crop cargoes have been booked already.

“Today we see strong demand from China for bulk and container shipments, both for immediate shipment and the new-crop period,” Mr Roache said.

“We estimate that at least 250,000t has already been sold in bulk, plus significant container business.”

Therefore, consumers who have bought the boat barley ex Brisbane may find it arrives by road from South Australia, Victoria, or southern NSW instead of by ship from WA.

Barley arriving in the northern market has therefore reflected the surge in price caused by China’s re-entry, and Smithfield Cattle Co commodity buyer Brett Carsburg said the barley market may have more upside.

“China demand for WA barley has lifted Brisbane prices by up to $25/t, but it’s still probably cheaper than wheat,” Mr Carsburg said.

The Brisbane FOT market is sitting at around $425-$430/t, and servicing sites in the Brisbane and adjacent regions, while barley being trucked up from southern NSW is supplying the Downs market proper.

While such a rally would normally prompt a run of offers on warehoused or on-farm barley, Mr Carsburg said concerns about dry conditions have prevented local offers from coming to light.

“High prices aren’t shaking it out; only rain will shake it out.”

In combination with a huge export program out of all Australian ports, the concentration of domestic feedgrain use for cattle, poultry, and pigs in the north means stocks of current-crop wheat are relatively low in Qld and northern NSW.

“Wheat’s risen because of lack of sellers; there are weather-driven concerns about yields now.”

Vast areas of north-west NSW have not been planted due to dry conditions throughout the planting window, now well and truly closed for wheat, barley, and durum.

Crops east of the Newell Highway in northern NSW are generally looking at average yields at best, as are crops in southern Qld.

“In Queensland, some of those crops are going to be thirsty; everyone’s worried.

“East of the Newell, crops are hanging on quite well, but they’ll need rain soon.”

As the Black Sea conflict continues and drought impacts North America’s production, Mr Carsburg can see no downside to current values.

“Prices are here to stay until October next year; 2024 is going to be hard for the consumer.

“Consumers are all worried about dry weather impacting yield, and 2024 pricing.”

Quality could also be an issue, with heady competition from exporters and millers expected on what could well be the highest-protein crop seen since 2020-21, and a high incidence of pinched grain possible if rain fails to show up.

This could be the polar opposite of the plump barley and ASW-type wheat that has been plentiful in recent season.

Once new-crop rolls around, Mr Carsburg said feedgrain buyers will also miss market-setting sales from growers in north-west NSW, who in recent years have had big volumes to sell.

“It’ll be a seller’s market; crop volume won’t be there.”

Southern markets have been mostly steady on limited volume, as growers and trade longs wait to see if Chinese demand for barley is going to show up ahead of harvest.

In the Riverina, barley and SFW are making the best money by heading north on a truck to consumers on Qld’s Downs.

“We haven’t seen values jump straight away; if the WA barley is going to head to China, they’ll be looking into southern NSW to fill that volume that’s been booked to go on boats to Brisbane,” one up-country trader said.

Yield prospects for crops in the southern half of NSW are mixed, ranging from slightly below average in some plains and outer slopes districts to above average in others back into the inner slopes.

“Even though a lot of crops look good, the background noise of El Niño means the grower is not forward selling.

“Bad news creeps from north to the south and everyone’s cautious about how much they sell forward.”

Into Victoria, traders and growers are currently seeing competition on any parcels of grain they are offering from the northern feed market and from export.

“With prices where they are, a few more rains will see growers liquidate what they’ve got.”

Tags: Market, tariffs, demand, bulk, Australia, container, China, exports, barley, wheat, shipments, sorghum