LOCAL barley markets were littled moved by yesterday's formal announcement that China had imposed tariffs on imports from Australia with analysts saying the market had already factored the news.
After a big fall in both old and new crop values last Monday when China lodged its preliminary decision to impose the duties the market has rallied slightly.
There was virtually no liquidity in the market in the three days after the news as the industry took time to digest its impact, with prices around $50 a tonne down on previous offers and some growers feared the market would descend into freefall.
However, later in the week and early this week there has been a slight rally of around $15/t indicating there is market support at current values.
Currently old crop bids in Victoria, where the majority of unpriced stocks remain, are at around $260/t delivered Geelong, while new crop bids are at about $225/t.
Analysts have said there are a range of factors why the prices may have rallied.
Brad Knight, GeoCommodities managing director, said barley was trading at a significant discount to wheat, which made it attractive in feed rations.
"The discount has been there for some time and in most of the livestock industries where it is possible to switch to barley they have done so," Mr Knight said.
"The spread between wheat and barley is now out to around $100 a tonne so where there can be substitution there will be."
Mr Knight said most domestic feed industries could incorporate at least some barley in the ration, but added some would require wheat.
He also said there was demand off-shore.
"Our barley price, with the more favourable currency rate, is well and truly price competitive internationally.
"End users will have to ensure the price remains above export parity if they want to be assured of supply and there is still another six months or so until the new crop comes online."
Nick Crundall, Market Check head of strategy said Australian barley was well priced on the world market at present.
"We are about as cheap as anywhere at present so the export market is competitive into places like Saudi Arabia and south-east Asia."
Mr Crundall also said he did not feel the barley scenario would have a negative impact on wheat.
"There has been some talk about falls in barley dragging wheat prices down but at present that is not likely given where the spreads are and the demand for barley."
In spite of the muted outlook for barley Mr Crundall said new crop values at present were not bad on a historic basis.
"That $225/t is well within the average range, it is just that prices have been a lot higher due to the drought in the past couple of years."
Mr Knight said old crop values would depend on how much barley remained unpriced.
"We know there was very little barley in NSW and Queensland, but how much is left in Victoria and South Australia is interesting," he said.
"The supply will need to be rationed until new crop comes on line, but given it was a relatively good season for barley in that area some feel that should not be a problem, getting a clearer picture on stocks will reveal more about old crop pricing trends."
Mr Crundall said the majority of barley exports had already gone.
"It was a front heavy export program, there are some shipments to China impacted but a lot of the trade that was going to happen has already been executed."
Mr Knight said Australian farmers' approach to potential lower barley prices at harvest would differ according to their yields and financial position.
"If the positive weather signals are right and we have a good year then people might decide that even at a lower value the gross margins per hectare are good enough to sell or they may have had a run of bad seasons and need to generate cashflow," he said.
"On the other hand, some have said they will learn from the example of 2016-17 where there was a massive year and low prices, but within two years prices were up sky-high due to the drought.
"They have said they will look to hang onto barley until there is a better price on offer."
Mr Knight said there would be some farmers who adapted this strategy but added in general most would sell earlier.
"We hear a lot of talk about farmers storing for long periods of time and certainly some do it but I don't think it is to the level you would expect from what you hear."