A RELATIVE paucity of malt barley internationally may provide support for Australian barley growers able to produce malt quality grain, but a suffocating glut of feed grain across the globe will put a cap on potential upside.
Subscribe now for unlimited access to all our agricultural news
across the nation
or signup to continue reading
That is the view of the majority of analysts, who highlight malt barley as one potential opportunity for Australian growers to achieve premiums above the broader market.
Speaking at last week’s Australian Grains Industry Conference (AGIC), Nathan Cattle, NZX general manager, said wet conditions in the European Union, particularly in France, a major producer of malt barley, meant it was a space that needed to be monitored.
At present, Australian spreads between malt and feed are only at $20 a tonne, which long-time grain market analyst Malcolm Bartholomaeus said was at the lower end of the scale historically.
“It is rock bottom, you would expect to get better than that at harvest,” he said.
However, he said while spreads may increase, he also said the feed market would keep prices from going too high.
“The International Grains Council has just adjusted its corn estimates to within a million tonnes of the 2014-15 record and that will weigh heavily on the market.”
“The problem for malt barley is that while there may be a premium, it is a small scale product on the global scale and will not pull away from general barley prices too far altogether – we would be lucky to see malt / feed spreads like last year in Australia where they were out to $70/t.”
Mr Bartholomaeus added that much of Australia’s malt barley went to the price sensitive Chinese market, also curtailing upside, while low shipping rates will bring both Canada and Ukraine into the equation to ship economically to key Asian markets.
Already, Australian new crop feed barley prices are at low levels.
Mr Bartholomaeus said current Port Adelaide feed barley new season bids were at $182/t, well above the low prices posted in 2009 of $138/t, but still at the low end of the market with many analysts predicting further falls in global grain prices in the lead up to the Australian harvest.
Mr Cattle said end users would buy feed barley, if the discount was right, but it would be significantly below APW grade wheat.
“At parity end users wants wheat, but $60 discount a tonne below APW they go to barley, and it is $70/t below at present.”
Barley Australia director John Stuart said there would be less malt barley produced in traditional competitors to Australia such as Canada and the Ukraine as they embrace alternative rotations.
“In Ukraine, corn is increasingly popular, while in Canada high pulse prices have made those crops attractive to farmers.”
However, he said Australia was producing malt barley in more areas than ever.
“For the first time ever, last year northern NSW and Queensland was the major production zone for malt barley in Australia,” he said.
The delicate pricing situation leaves growers with difficult decisions regarding how much nitrogen to feed their crop to attempt to achieve malt grade grain.
“The crop is generally in good condition in most parts of the country,” Mr Bartholomaeus said.
