THE FALLOUT from the shock China decision to launch anti-dumping investigations into Australian barley exports, combined with harvest selling and prices that sit significantly above international parity have all put pressure on Aussie barley prices.
Barley prices have fallen between $30-50 a tonne in most port zones over the past week and there are potential further falls as industry seeks to make sense of the Chinese bombshell.
Prices now sit at around $350/t delivered Melbourne and $290/t delivered to Western Australian ports.
Malcolm Bartholomaeus, Bartholomaeus Consulting, said buyer interest for feed barley had virtually stopped.
“That demand for feed barley has been killed in the short term,” Mr Bartholomaeus said.
“No one wants to own it and it seems at least some growers are wanting to sell it, seeing it as still a historically high price.”
Speaking before the Chinese news came to hand, Grain Growers chairman Brett Hosking said buyers were seeking to take a backward step to get a feel for how much grain was out there.
“It is not a case like you get some years where the massive production brings prices down, it is just that the buyers have come back a bit from those really high prices and are just buying a little hand-to-mouth,” Mr Hosking said.
Grain Producers Australia chairman Andrew Weidemann said he did not think the drop in prices would spook growers with stocks into selling.
“There have been a lot of abandoned acres out there where people have cut hay, there are some issues with the sorghum crop and it getting dry and there is a long wait until another winter crop comes online, so farmers, especially on the east coast are likely to be ready to wait it out,” Mr Weidemann said.
“We will see some selling as people decide it is still a very high price and look to generate cash flow immediately but I would suggest many have seen the pay-off from storing grain in recent years and hedge at least some of it by storing it into the new year.”
Mr Hosking agreed that grain stocks would be extremely tight down the east coast.
“We’ve known for some time we’re likely to see grain deficits in NSW and Queensland but even Victoria will likely be close to a net importer of grain, in spite of farmers in some parts of the state faring a little better than the rest of the east coast.”
Mr Hosking said he did not think that even with the high grain prices on offer down the east coast that feed grain would be imported from overseas.
“The compliance work required seems to be too great, instead feed grain will continue to come across from Western Australia.”
Mr Hosking said prices would need to be high to continue to make the numbers on the transcontinental shipments work.
“You’d want prices of above $400/t delivered to an east coast port to make that interstate grain work,” he said.
Mr Bartholomaeus said international prices were weighing on the Australian market.
“Barley is certainly being harder hit than wheat, a bit is that it is major grain being harvested so far in Victoria and South Australia where the crops are a little better, but also because of international pricing,” Mr Bartholomaeus said.
“We saw a Saudi tender for barley recently and they got their quota easily which surprised the market, it has seen world prices soften and that has influenced the Australian price.”
“Even with the fall in Australian prices we have the same premium to international values, it is just that the international price has fallen by the same amount.”
Mr Hosking said a wildcard in this year’s pricing was the difficulty in assessing how much feed in total there was.
“Hay is a really difficult one, how much is out there and what impact will it have given it was often from a failed grain crop.”
Mr Bartholomaeus said while grain imports were unlikely grain substitute imports, such as soy meal, would continue to be strong.
Mr Weidemann said he did not think extra hay supplies would cover the lack of grain.
“There has been a lot of hay cut, but in many areas the yields are very low and it is taking away from overall grain supplies because the crops were planted for grain, so in the end it does not represent a new source of feed as such.”
Mr Bartholomaeus said the discount of $70/t between feed barley and APW wheat in the Port Adelaide port zone was high compared to recent months, but added in other seasons recently the average spread had been $65/t.
He said that spread would come under pressure, but added he saw that being because wheat prices were coming back rather than a kick in barley.