THE significant increase in on-farm storages since the bumper 2016 harvest could possibly come into play this year for barley, as prices were not expected to get much better than at present.
Rabobank grains and oilseeds senior analyst Cheryl Kalisch Gordon said concerns were being raised about how much this harvest would be similar to the 2016-17 season when it came to prices.
"There are a few differences that may need to be factored into calculation," she said.
"The Australian dollar is lower; we have higher global benchmark prices; we also have lower interest rates, which will be critical to cashflow, and a lot more on-farm storage has been put in since 2016."
Ms Kalisch Gordon said globally prices were being supported, particularly with supply concerns out of the Black Sea region.
"They have just had a very dry autumn period, the driest in nearly a decade, so winter crop establishment has not been great and it has taken a shine off their potential," she said.
"There is also dryness in the United States and wheat downgrades in Argentina, so that is really helping barley prices.
"But the price discount of up to $90/t to wheat will remain for as long as China is out of the market.
"And our production is going to be a couple of million tonnes above last year, which also won't help."
Ms Kalisch Gordon was doubtful barley prices would remain above $200/t during harvest.
"Right now we are at a stage where we think wheat prices should remain decent, even with harvest sales, with east coast prices around that $300/t mark, while barley sits at $220/t," she said.
"Malt barley will also be challenged because we won't have any direct Chinese sales boosting the market.
"So we're probably going to be fairly well supplied on malt and feed.
"The biggest swing factor will be the capacity and the intention of farmers to hold stocks.
"But if we see forced sales of barley at harvest, that will put pressure on prices."
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Grain consultant Malcolm Bartholomaeus said even though barley prices were around $225-$235/t, that was still "terrible".
"The only reason barley prices are up is because all grains are up," he said.
"Last week, relative to APW wheat, feed barley was at an $80/t discount - that's as bad as it gets.
"Malt barley prices also only had a very small premium.
"Barley prices have only risen is because wheat has risen by $50/t in the past 2-3 months and barley has gone along for the ride, but not even by that much, so I think that is terrible."
Mr Bartholomaeus said he advised clients at seeding that if they chose to grow barley, they needed to be prepared to not sell it straight off the header.
"The best return from feed barley will be using it yourself on-farm," he said.
"As soon as you have to try and sell it, it will only be an export-based price.
"There could be some domestic demand ramp up because prices are so cheap, when compared to wheat, but that doesn't help growers on the EP or YP, where there isn't really a domestic market.
"We're really back to deregulation prices."
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Alisha Fogden
Journalist at Australian Community Media newspapers since 2007.
Journalist at Australian Community Media newspapers since 2007.
