Market Morsel: The wind that shakes the barley

Market Morsel

A fell wind blew through the Australian barley industry in recent years when China added a tariff to our exports. In August, we got access back to China, opening up one of the world’s largest importers of barley.

I was told by many over the years that there was only a minimal impact on the barley trade within Australia and that we found new homes –”we can do without China”. We’ll that is bunkum.

So, a few months later, what has the impact been?

Let’s look at the first chart below; we can see that pricing had improved since the middle of the year when it became apparent that China was most likely going to remove the tariff on barley. However, at the same time, we have had drying conditions.

One factor that we can see is how quickly Australian barley has gone from being discounted to French values. Our pricing moved from a premium to a discount the month of the tariff and moved back to a premium on the month that the tariff was removed.

China has been back almost immediately buying cargoes, and we expect they will be one of, if not the biggest, buyers this coming season.

It would have been great if we had access to China during the recent years of huge surplus, but it is what it is. We now have an opportunity for improved barley pricing relative to overseas values and wheat pricing.