KEY existing barley markets in Japan, Vietnam and Korea will be critical to maintain, while previous markets in Africa and South America could be established again as export options for Western Australian barley.
The CBH Group hosted a barley market outlook via video conference last week, with chief marketing and trading officer Jason Craig highlighting that while there were other markets out there, they were all relatively small in comparison to China.
For example, China has a malting capacity of almost 5.4 million tonnes, while India is the next biggest in the Asian region, sitting at about 10 per cent of that.
Despite India being the next largest, the country is not currently a market for Australian malt due to factors including weed seeds, phytosanitary problems and chemical residue issues.
Mr Craig said 10 to 20 years ago, Africa and South America were two regions which Australia had markets in.
"Once upon a time, we had key markets in South Africa, Columbia, Ecuador, Peru and even Chile," Mr Craig said.
"While some of them have breweries and malt houses in China, we still need to establish ourselves in them again.
"But that takes time, varieties have to be accepted and there are some issues in terms of tariffs and some phytosanitary problems."
While CBH and the wider grains industry are working hard to re-open these markets, plus look at growth markets in places like Ethiopia, the capacity of all of them is significantly lower than China and the malt premium will reflect that.
Over the past 10 years, Australia exported more than 51 million tonnes of barley and China accounted for about 30mt of that, representing almost 60pc of the exports.
Mr Craig said since 2000, overall exports of barley from all origins around the world have increased, however Australia's share of them had declined.
"The increases we've seen are from Russia, Argentina and the Ukraine, these new origins have been growing very rapidly over these times.
"As a result, the importance of Australia as an export country into the major markets is becoming less.
"That doesn't mean we shouldn't continue to grow our barley exports over time, but it does show we have increased competition to our key markets around the world."
When it comes to feed barley, the Middle East, on average, imports between six and seven million tonnes of feed barley per year.
Traditionally that was an Australian market, but then Ukraine and Russia evolved as key suppliers, while at the same time China gave Australia the growth which allowed exports to pivot from the Saudi market into China.
Mr Craig said going forward, Saudi will accept high quality Australian feed barley.
"We are focused on reopening the Saudi market and we are confident Australian barley will be accepted into it, but it will be more about price, rather than anything else," he said.
"Feed barley has always been the base price for Australian barley, but the Middle East and Saudi Arabia are going to be that market that provides the price point to start with going forward."
Thailand has also been a growing feed market since 2016 and CBH has been one of the key suppliers to this market since then.
That market has grown since a trial shipment in 2016/17 at about 20,000t to already being a market of about 430,000t to 500,000t this year.
CBH believes this market could grow to a market of between 800,000t to one million tonnes of feed and due to freight, it could provide better returns than going to Saudi in the short-term.
In terms the of malt barley market, CBH will continue with traditional markets in Japan, Vietnam and South Korea.
However, Mr Craig said beer consumption in China and South East Asia was between 30pc and 40pc in decline as a result of COVID-19.
"It will take some time for these markets to establish themselves and grow at their traditional rates," he said.
"There is also a great opportunity for Australian maltsters to take some of the export business China was doing into South East Asia, so we do expect Australian maltsters will take some of that market share."
Despite the changing markets, it is unlikely that there will be any significant changes to barley segregations.
CBH still plans to segregate malt and feed as they do not want to put everything into a feed barley category and not give the opportunity to Western Australian growers to maximise their returns.
