Demand Sustains Barley Price, But Supply Is Low

GOOD demand for feed barley on world markets continues to underpin prices, with the crop trading at near historic premiums to wheat.

The downside is that there is less barley about. As combines clear more acres, it is becoming apparent that yields are down on last year, though still in line with the five-year average of 6.13t/ha (2.48t/acre).

Intervention stores are almost empty across Europe, and only a small tonnage of stocks was carried over from last season.

So, with world import demand put at 19m tonnes for 2000/01, compared with the more usual 12m-15m tonnes, the outlook is good, says Gerald Mason of the Home-Grown Cereals Authority.

Drought in the Middle East and Africa is helping, since those countries generally cant switch to other grain types.

Barley is worth 4-5/t more than wheat (about 60-61/t ex-farm), and higher prices are being paid to fill bigger vessels.

Unfortunately, yields are not spectacular, and we shall probably only have about 1m-1.2m tonnes to export this season.

Demand has pushed world barley prices up to EU values (about 70/t on board ship), so no export subsidies are required.

That is helping EU exports, and also means the European Commission is not having to erode subsidised export tonnage limits, which are due to fall this year under GATT rules.

This means if there is further demand, and we have the barley, the commission will have more opportunity to use licences later on if prices fall when Australian and Canadian barley provides some competition, says Soufflets David Doyle.

Most barley samples seen so far would exceed the minimum 63kg/hl specific weight needed for exports.

Intervention requires slightly higher quality, but is not an issue at present, says Mr Doyle.

Open market barley is worth 2/t more than the November intervention price. At 68.80/t at current exchange rates, intervention equates to about 63/t ex-farm.

The malting barley market is only just starting, says David Balderson of Viking Cereals.

“Maltsters have a fair quantity of contracted tonnage to get through first, but there are pockets of demand.” But prices are “nothing fantastic”, he adds.

Regina at 1.7% nitrogen with 6% screenings is worth about 8/t over feed.

“The grain we have seen so far is usable, but it is still very early to comment.

Nitrogens do not appear to be too bad, but screenings are higher than we have seen for a year or two, while specific weights are in the 63-65kg/hl bracket.”