Grimmer Malting Barley Outlook
DONALD - May 29/02 - SNS -- Optimism about malting barley market prospects fort the coming year are fading, forcing the Australian Barley Board to lower its projected for the 2002-03 crop.
The board lowered its projected returns for Sloop malting barley to between A$210 and $220 per metric ton (MT), while dropping projected returns to between $205 and $215 MT for Schooner malting and between $145 and $155 MT for feed barley.
ABB Managing Director, Michael Iwaniw said next season's barley prices had the added pressure of predictions that another average to above average crop will be produced.
"Another large crop will further increase supplies which will place pressure on prices on top of the factors already evident on the market," said Iwaniw. "However, there is a long way to go and predictions are this stage could sway either way as the season progresses.
"The Australian crop hasn't been planted, let alone harvested, so there is much that could happen to influence the international barley market between now and when the 2002-03 crop can be expected to be completely sold in 2004."
Iwaniw stressed the biggest factors influencing prices were external to Australia.
"The large supply of malting barley has meant that less than ideal barley may not find a market in the malting industry and customers will not take malting barley below 10% protein. Unfortunately the last season produced a lot of low protein malting barley and the lack of demand for it from the malting market has forced us to downgrade the relevant barley to feed which is reducing the pool's revenue level."
"In addition, the US Farm Bill, which guarantees large grain production subsidies to American farmers, sent a nervous ripple through the market. While we can't be sure, we may have seen one of the first political reactions to the US Farm Bill when the European Commission recently resumed issuing export subsidies for some of its barley stocks.
"The size of the export subsidies is quite small compared to subsidies issued by the EC in the late 1990's. However, to have the program resume after two years of no EC subsidies has caused nervousness in the market place as it indeed could be an indication of more to come.
"Australia's exchange rate firming against the US$ is also resulting in lower returns in Australian dollars for grain sold on the international market."
Iwaniw said malting barley has been affected by the available supply from large world production over the last two years.
"China -- which is the world's largest importer of malting barley -- is a particularly price sensitive market and has been reluctant to commit to forward sales, preferring to buy only when they need the barley," said Iwaniw.
"With the Chinese malting-brewing industry coming to a virtual standstill during their current summer due to the heat causing unsuitable conditions in many malthouses, this has meant little activity in the malting barley market."
Iwaniw said demand from China was expected to resume at the conclusion of their summer.
"We expect that the second half of the season will see a resumption in demand from China and we are hopeful that our exports into China will pick up again from July onwards."
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