The lat­est global grain out­look with Pe­ter McMeekin

Central and North Rural Weekly - - FRONT PAGE - PE­TER McMEEKIN Nidera Aus­tralia

GLOBAL bar­ley mar­kets have been quite sub­dued and un­event­ful in re­cent weeks and ap­pear to be in search of news that will set the tone as we en­ter the north­ern hemi­sphere win­ter.

The trade has been ex­pect­ing a ten­der out of Saudi Ara­bia for the past few weeks, but noth­ing has been forth­com­ing.

The Mid­dle East king­dom is the world’s largest im­porter of bar­ley but is fore­cast to re­duce im­ports to about 8 mil­lion met­ric tonne in 2017-18. This will be down from more than 9MMT in the pre­vi­ous sea­son.

The Saudi Ara­bian Grain Or­gan­i­sa­tion, which has ex­clu­sive buy­ing rights for feed bar­ley, has in­di­cated it was look­ing to par­tially sub­sti­tute do­mes­tic feed bar­ley con­sump­tion with im­ported corn due to the un­com­pet­i­tive price of bar­ley rel­a­tive to corn and other stock­feed ra­tion al­ter­na­tives.

The op­por­tu­ni­ties for corn in Saudi Ara­bia are huge. Their dairy in­dus­try is state of the art by world stan­dards and the poul­try in­dus­try is ex­pand­ing rapidly, sup­ply­ing both the do­mes­tic mar­ket and into neigh­bour­ing Gulf coun­tries.

One of the big­gest sup­pli­ers of feed bar­ley into Saudi Ara­bia is Ukraine. In­ter­est­ingly, the Ukraine farmer has been swing­ing spring bar­ley area across to corn in re­cent years. New va­ri­eties and vastly im­proved farm­ing prac­tices in Ukraine have sig­nif­i­cantly in­creased the prof­itabil­ity of corn rel­a­tive to bar­ley.

While the global corn mar­ket is ex­tremely com­pet­i­tive, Ukraine will be ex­tremely well po­si­tioned to in­crease its ex­ports as Saudi Ara­bia in­creases im­ports.

Cur­rently the world’s fourth-largest ex­porter of corn, fur­ther in­creases in pro­duc­tion and ex­ports could eas­ily see Ukraine chal­leng­ing for a place on the podium in the not too dis­tant fu­ture.

Grain im­ports into Saudi Ara­bia have two pri­mary dis­charge points, the Ara­bian Gulf port of Dam­mam and the Red Sea port of Jed­dah. Cur­rent in­ter­na­tional bar­ley val­ues make Euro­pean and Black Sea ori­gins the most com­pet­i­tive into Jed­dah, with Jan­uary de­liv­ery priced at about US$220 cost and freight against Aus­tralian val­ues of about US$227.

The story is a lit­tle dif­fer­ent into Dam­mam. Aus­tralia is still trad­ing at a pre­mium to Euro­pean and Black Sea ori­gins but the south­ern hemi­sphere’s sec­ond largest bar­ley pro­ducer, Ar­gentina, is the most com­pet­i­tive ori­gin for Jan­uary de­liv­ery at about a US$10 dis­count to Aus­tralian of­fers and a US$5 dis­count to the cheap­est Euro­pean sup­plier.

In re­al­ity, much lower pro­duc­tion here in Aus­tralia this sea­son, com­pared to last, and rel­a­tively strong do­mes­tic de­mand means the ex­portable sur­plus will be much lower year-on-year. Aus­tralia will not have to chase ex­port de­mand ag­gres­sively this sea­son.

Rel­a­tively in­elas­tic de­mand out of other Gulf states such as the United Arab Emi­rates, Kuwait and Oman will be pre­ferred over the com­pet­i­tive Saudi Ara­bian de­mand.

How­ever, China will be the key mar­ket for Aus­tralian feed bar­ley. De­mand has been strong and Aus­tralia is cur­rently the most com­pet­i­tively priced ori­gin into that part of the world at about US$225 cost and freight for Jan­uary de­liv­ery.

In ad­di­tion, in­ter­na­tional wires are re­port­ing the Black Sea re­gion is close to sold out of bar­ley and the win­ter ex­port fo­cus will turn to wheat and corn. This ef­fec­tively takes one of the world’s big­gest bar­ley sup­ply re­gions out of the mar­ket ahead of the Aus­tralian har­vest.

The Ar­gen­tinian farmer has also been a big seller of bar­ley re­cently. This has enabled South Amer­i­can ex­porters to en­gage the in­ter­na­tional con­sumer and lock in a mar­gin against th­ese grower pur­chases.

❝ The op­por­tu­ni­ties for corn in Saudi Ara­bia are huge.


SOUGHT-AFTER: One of the big­gest sup­pli­ers of feed bar­ley is the Ukraine.

Newspapers in English

Newspapers from Australia

© PressReader. All rights reserved.