World: Poor barley crop in Canada, the US may open up more opportunities for Australian farmers
As the world continues to exit from the pandemic, beer sales are expected to rebound, and in turn, demand for malting barley is expected to increase also. However, drought conditions in Canada and the USA have savagely slashed yields, and reduced quality, so an opportunity to cover the shortfall may open up for Australia, Mercado reported on September 23.
A dry start, and ongoing drought in Canada and the USA have resulted in large decreases in barley production, and may impact upon malting barley supplies, through reductions in the quantity & quality of the 2021/22 crop.
The USDA estimates that US total barley production will be slashed by 1.3 mln tonnes (36%) to 2.3 mln. According to the Montana Department of Commerce, over 57% (2 mln tonnes) of US barley production is used for malt, suggesting that the US may experience a malt barley shortfall in excess of 1mmt this year.
Yueshu Li, director of the Canadian Malting Barley Technical centre (CMBTC) stated that drought has elevated protein levels above malting barley specifications, and slashed yields, tightening supply, and creating huge production challenges for malting companies.
Canadas barley crop this year was also a disaster due to the drought, with production dropping 2 mln tones (20%), to a forecast 8 mln tonnes for the year. Canada exported 2.8 mln tonnes of barley in 2020. Key customers were China (2 mln tonnes), Japan (530 thousand tonnes) and the USA (150 thousand tonnes). The International grains Council (IGC) is forecasting a 1 mln tonnes fall in Canadian exports to only 1.8 mln tonnes in 2021/22.
The latest September 2021 ABARES forecast for the total Australian barley crop currently sits at 12.5 mln tonnes for 2021/22, slightly less than 2020s total.
AGEIC and the GRDC indicate that, typically, around 30-40% of Australian Barley production meets malting grade specifications each season, with around 75% of that exported. According to barley Australia, our domestic brewing industrys consumption is minimal, at only 230 thousand tonnes grain equivalent.
If we assume that 25% of the forecast 12.5 mln tonnes barley crop for 2021/22 will be exported as malting grade, that equates to 3.1 mln tonnes, with the remaining 3.4 mln of the IGC export forecast expected to be feed grade.
On average, malting grade barley ex Kwinana had fetched a 10% premium to feed grade barely in Australia from 2016-2018, but since 2019, premiums have been largely negligible, with occasional spikes to the 5-7% range.
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