A Canadian Wheat Board analyst has dismissed a prediction by a U.S. grains industry official that corn will soon displace barley as the feed grain of choice in Saudi Arabia.
“There may be some long-term growth in demand for corn as the population grows and more compound feed is needed for the poultry sector,” Neil Townsend said.
“But their demand for barley is very consistent and corn won’t be replacing it any time soon.”
Saudi Arabia imports six million tonnes of barley a year and two million tonnes of corn.
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Barley imports tend to remain steady regardless of the price because about 80 percent is fed to sheep and camels, which won’t eat corn. The remainder goes into compound feed, which is usually 15 to 20 percent barley, depending on prices.
Canadian sales to the country fluctuate wildly, depending on Canadian domestic and export prices, ocean freight rates and barley production in other exporting regions.
Canada has shipped 1.1 million tonnes of feed barley to Saudi Arabia in the first nine months of the 2007-08 crop year, reflecting a poor barley crop in Europe and export taxes in the Black Sea region.
In the previous three years sales were zero, 712,900 tonnes and zero.
Last week, Jay O’Neil, an economist at Kansas State University and consultant to the U.S. Grains Council, said there are tremendous opportunities for U.S. corn exports to Saudi Arabia.
“The Saudi government is making a purposeful effort to move away from its dependence on barley in favour of compound feed comprised of corn and sorghum,” he said in a council newsletter.
A recent increase in import subsidies on corn will create a strong, expanding market for corn and dried distillers grain, he added.
While he didn’t include a time frame and acknowledged that a lot of market development and education will have to be done, O’Neil expressed confidence about a shift from barley to corn.
“As Saudi Arabia cuts its dependence on barley, large quantities of that commodity will have to seek other markets and this likely will dilute the world value of barley.”
Townsend said that isn’t going to happen in the foreseeable future.
“He’s totally out of step with what’s happening right now,” he said.
“This year the price of corn is well above barley so none is going to shift to corn.”
Expected large barley harvests in the Black Sea region and Europe this year will keep international barley prices down, which will also likely keep Canada out of the Saudi market in 2008-09.
“Next year we won’t do very much business at all.”
However, the high price of corn relative to barley could create sizable export opportunities to the United States, perhaps in the range of 400,000 to 500,000 tonnes.
