Barley
cropping
Barley
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Output $246m est. Down 28% yoy
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Lowest production since drought in 2002–03
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Tight supplies led to the highest average price for barley
Barley production was the lowest since the Millennium drought, at only 630,000 tonnes. Prices were generally higher due to the tight supply of feed grains across the east coast. The Chinese anti-dumping investigation was an ongoing concern for growers.
Maximising productivity and grain quality
NSW DPI led the GRDC funded Southern Barley Agronomy Project conducted across NSW, Victoria and South Australia. The key findings of the research indicated that sowing date is the most critical factor in maximising productivity and grain quality of barley. The research sought to uncover whether different varieties respond differently to different management. Key considerations to variety choice include adaptation to drought and heat stress conditions as well as grain size and test weight.
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Production
Barley production was historically low, down to 630,000 tonnes, the lowest since the Millennium drought in 2002–03. The area planted was 600,000 hectares, which accounted for approximately 20% of the winter cropping area. Yields suffered in the harsh weather conditions, down to 1.1 tonnes per hectare, nearly half the decade average6.
Barley area planted and production
- Area planted
- Production
Download (.XLSX) Source: ABARES (2019b)
Feed grain costs
- Barley
- Wheat
- Sorghum
Download (.XLSX) Source: ABARES (2019b); DPI (2019a)
Price
The average price for feed barley (delivered Sydney) was $390 per tonne, 43% higher year-on-year due to scarce supply6. Prices increased steadily through the year as drought conditions continued through to harvest. The announcement by China of an anti-dumping investigation into Australian barley exports caused a sharp decline in prices across Australia98, but this effect was short-lived. Prices peaked in December at $440 per tonne for feed barley, before steadily declining to $365 per tonne at the end of the financial year.
The wheat-barley spread fluctuated significantly over the year, staying at around $20 per tonne in late 2018, widening to $65 per tonne in February, then closing again over the year to June. As the wheat-barley spread closed, wheat became more economic to include in feedlot rations. Feed wheat had similar costs per megajoule to barley for much of the year, though in early 2019 as the barley price declined, it became cheaper at 3.33 cents per megajoule51.
Trade
With a shortage of barley in the state, export volumes were negligible, at only 452 tonnes and a value of $218,200. This was 0.1% of production for the year. The Philippines, Republic of Korea and Singapore were the destinations for NSW exports, of which the Philippines and the Republic of Korea appeared to receive one-off shipments87.
Australian barley exports in 2018–19 were $1.38 billion, down 31% over the year. China was Australia’s largest market for barley, with an export value of $915.4 million, followed by Japan ($226.7 million) and Thailand ($90 million). Australia exported $732 million of malting barley, $647.6 million of feed barley, and $2 million of barley seed in 2018–19.
China was the largest buyer of malting barley ($643.4 million) and feed barley ($272 million).
Macroeconomic
Conditions
Australia was the sixth largest barley producer, after Russia, Germany, France, Spain and Canada142, 71. Production was lower in all major producing countries aside from Canada, with drought conditions in Germany, the largest barley producer in Europe. The drought in Germany affected the market for malting barley, with beer producers purchasing some feed barley to meet production127.
China, a major destination for barley exports, announced an anti-dumping investigation into Australian barley in 2018, asserting that prices for both malting and feed barley in 2017 were lower than the domestic prices110. The investigation may allow China to place a provisional tariff on Australian barley once it releases preliminary findings, and is expected to affect the industry in 2019–2025. This was a serious development, as China is the largest export market for Australian barley.
China’s anti-dumping investigation into Australian barley
Dumping refers to the practice of selling a good overseas for a price lower than it is traded in the home country, and investigations rely on a comparison of “normal value” and export sales on a transaction-to-transaction basis153. Because of this the analysis below is indicative only.
China announced an anti-dumping investigation into Australian barley in November 2018, asserting that export prices for both malting and feed barley in 2017 were lower than Australian domestic prices.
Barley exports to China have increased rapidly since 2014, with almost all exports in 2018–19 from WA, SA and Vic. During 2017, domestic feed barley prices were lower than export prices to China. WA feed barley prices were lower still, and have consistently been lower than on the east coast.
Historically, NSW has produced a smaller barley crop than WA, SA, and Vic. So while the effects of any decision from the anti-dumping investigation will be felt by those states more than NSW, there will likely be a negative impact on barley prices nationwide.
Barley prices: China vs domestic
- Domestic, Sydney
- Export to China
Download (.XLSX) Source: ABARES (2019a); GTA (2019)
