A LARGE tender from Saudi Arabia and a falling Australian dollar has caused the price being fetched for Western Australian barley to rise to about $260 per tonne.
Barley prices were trading at about $270/t in May before plummeting to about $220/t after China announced the introduction of an 80 per cent tariff on all Australian barley exports.
The rise in price, which is up higher than the long-term average of $250/t, is welcome news to WA farmers who are gearing up for harvest.
Clear Grain Exchange business development national manager Tom Guthrie said there was a Saudi Arabian tender two weekends ago, which was confirmed on Monday, September 21, "that WA and Australian feed barley is very competitive to that part of the world against origins that we compete with such as the Black Sea, Europe and Argentina".
"Some of that has come about because there was a bit of a change in flow where Australian feed barley is not moving to China, but the flipside is that Black Sea, European and Argentinian barley is now moving there.
"That has worked to draw demand from China to those origins and at the same time leaves us at the best price origin to Saudi Arabia."
Some of the lift in prices over the past couple of weeks has potentially also come about from a lack of grower engagement on sales with the uncertainty around production and quality.
While the soft Australian dollar has also helped export competition, it allows the grower to receive more in return.
"The big question is how well sold is the Australian farmer of feed barley, or barley in general, as we move into harvest and will they sell feed barley to cover off any cash-flow requirements during harvest," Mr Guthrie said.
"If you look at it when you've got wheat and canola prices at significant premiums to barley, you would expect that growers who can, will sell wheat and canola, prior to selling feed barley from a cash-flow perspective.
"Are we going to see that harvest pressure on barley, maybe not, but time will tell."
There's enough there to suggest that the price won't move that much lower unless there is a lot of engagement from the farmer on the sales side.
Mr Guthrie said Australian barley was now at a level where it was pricing well to the Middle East and Africa, but also pricing very well as a feed alternative in Asia.
"Thailand has become a market which is taking a lot more Australian barley at this price level and there is potential that other Asian feed destinations will seriously consider Australian feed barley at the current price," he said.
"The price has done the work to help market that grain into other destinations that it may not have gone to otherwise."
