China’s thirst for beer shows no sign of being quenched, and that’s good news for Canadian barley growers.
The Canadian Wheat Board expects to increase its sales of malting barley to China in 2009-10, according to Bob Cuthbert, the board’s senior barley marketing manager.
“It’s a continually growing beer market, with consumption increasing by five to eight percent annually,” Cuthbert said.
“Beer production in China is growing by leaps and bounds.”
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China’s domestic malt barley production is down about 20 percent this year to 2.7 million tonnes, and the overall quality is not good.
When combined with a lower quality barley crop in Australia, Canada’s biggest competitor in the Chinese market, that spells good news for prairie barley growers.
“We’re confident we’re going to see quite a big jump in China’s imports this year,” Cuthbert said.
“We think there will be more opportunities for Canadian malt barley sales into China at pretty decent values.”
China imported about 1.2 million tonnes of malting barley from all sources last year, which is expected to increase to 1.6 to 1.8 million tonnes in 2009-10.
The wheat board sold 400,000 tonnes to China last year, and Cuthbert said it is confident it will exceed that this year.
China usually produces three million tonnes of malting barley a year, but quality is variable and maltsters prefer Canadian barley if the price is competitive.
The prospect of increased sales to China has helped provide a glimmer of positive news for malting barley in recent weeks.
The Australian barley crop is larger than last year but adverse weather has downgraded quality, which will limit the availability of high quality barley from Down Under and increase demand for Canadian barley in a number of markets.
Also, world trade in barley is expected to rise by 100,000 tonnes to 3.9 million tonnes in 2009-10, according to the International Grains Council.
In recent weeks, both the wheat board and Australian grain company AWB raised their 2009-10 price outlooks for malting barley slightly, by $3 and $2 a tonne respectively.
However, with large European stocks weighing on the market, returns for malting and feed barley in 2009-10 will remain well below last year.
The wheat board’s 2009-10 Pool Return Outlook for malting barley is $211 a tonne for two-row, down from $314 a tonne in 2008-09. For six-row the PRO is $193 a tonne, down from $294 a tonne.
For feed barley, the PRO is $152 a tonne for 1 CW feed barley, down from $168 a tonne in 2008-09.
Alberta Agriculture market analyst Charlie Pearson said this year’s feed barley market will be marked by an unhappy combination of reduced demand from a shrinking livestock sector and grower reluctance to sell at current prices.
“It’s going to be a wrestling match between reduced demand and reduced supplies,” he said.
Pearson expects domestic feed barley in Alberta will be flat this year, averaging $3 a bushel ($138 a tonne) delivered to feedlots and slightly lower at the elevator.
“Farmers are not going to be very enthusiastic sellers much below $3 a bu.,” he said.
“It will dribble out through the winter but they’ll sit on it as much as they can.”
He said one possible positive on the demand side would be if country-of-origin labelling requirements in the United States prompted more exports of meat rather than animals, which would require more domestic feeding and boost demand for barley.
