Canada taps into Chinese barley demand

Global demand for top quality malting barley continues to grow

Annual barley plantings in Western Canada continued their downward trend in 2017, slipping to roughly 5.44 million acres — the crop’s smallest seeded acreage in more than a decade.

Nonetheless, there is cause for optimism, according to the head of the Canadian Malting Barley Technical Centre.

Despite reduced acreage and relatively tight margins, global demand for top quality malting barley continues to grow, especially in China, said CMBTC general manger Peter Watts.

“China is the world’s largest market for malting barley by far and they want more Canadian barley,” he said.

In a presentation to barley growers at CropSphere in Saskatoon, Watts said China’s import demand for malting barley is about three million tonnes annually.

Most years, China will import about 600,000 tonnes of high quality malting barley from Canada.

The vast majority of China’s imports come from nearby Australia, which can supply barley at a lower cost based on its proximity to the Chinese market.

Last year, however, Australian barley production dropped significantly, falling to roughly eight million tonnes in 2017 from 13.4 million the year before.

Poor harvest weather in some parts of the Australian production area further complicated Aussie export programs and elevated prices for Australian malt barley.

In that environment, Canadian malting barley became more competitive, resulting in a larger-than-normal export program.

In his presentation, Watts listed Canadian exports to China at 835,000 tonnes in 2016-17 and 1.2 million tonnes in 2017-18.

“Exports to China this year will meet one million tonnes minimum … and we may reach somewhere in the neighbourhood of 1.2 million tonnes,” he said.

Canadian growers should also be mindful that China generally prefers malting barley with relatively high protein levels.

Unlike Canadian maltsters and brewers, who prefer barley in the range of 10 to 11.5 percent protein, the Chinese brewing industry prefers barley with a minimum protein content of 11.5, Watts said.

“They would actually prefer 12, 12.5 or even 13 percent, so we’ve actually got a bit of a dichotomy in Canada because we’ve got a domestic market that’s looking for lower protein content in that 10 to 11.5 range and an export market that’s looking for higher protein.”

The take-home message for Canadian barley growers?

“If you don’t have a contract with a domestic malting company or a grain company that specifies protein content … your grain is probably going to go into the export market, which is China,” Watts said.

“So don’t be shy on the nitrogen and don’t be so shy to push up the protein content.”

As it stands, Canada is in an excellent position to meet unfilled Chinese demand over the near term.

Canadian growers harvested an excellent malting crop last fall with outstanding storability and little risk of germination loss.

“We had a great malting barley crop in … Western Canada this year. About 85 percent at least of the western Canadian malting barley crop meets malting specs,” he said.

Although some of that material will be sold into domestic feed markets, any that’s in storage may find a market with grain companies hoping to ship to China.

“China (celebrates) their New Year in about a month,” Watts said.

“Typically, when they come back after their New Year, they evaluate their situation and that’s when we’ll see if they come back into the market.”

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