Not only does Canada have a quality malting barley crop to sell this year, but prices are forecast to be substantially better.
The Canadian Wheat Board improved its outlook for malting barley prices by $20 per tonne for both two-row and six-row in its September Pool Return Outlook.
This turn of events has come at the misfortune of Australian farmers. Severe drought has devastated their barley crops.
The latest estimates by the Australian Bureau of Agricultural and Resource Economics says the barley crop will drop by 50 percent this year to 3.4 million tonnes from 6.8 million tonnes last year.
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Drought prevented farmers in the states of New South Wales and Queensland from seeding 2.4 million acres.
But the drop in barley production is just half the story.
Australian exports of barley – both malt and feed – are expected to drop by 1.6 million tonnes or 40 percent this year; from four million tonnes in 1993-94 to 2.4 million tonnes this year.
Since ABARE released its estimates, conditions have deteriorated in Australia and some Canadian analysts say the thinking now runs that 2.4 million tonnes is an optimistic export forecast. In fact, Australian barley exports have averaged 2.4 million tonnes (not including malt) in the last five years.
“There’s a high probability the crop has deteriorated further,” says Charlie Pearson, coarse grains analyst with the UGG’s Grower Marketing Services.
Does that give Canada an opportunity to move in on some of Australia’s malting barley markets?
“Absolutely,” Pearson said.
China, with a population that has a growing appetite for beer, is the likeliest market.
The United States department of agriculture estimates China may be in the market for 1.5 million tonnes of barley. The International Wheat Council is a little more conservative with its forecast at 1.1 million tonnes. Virtually all of that demand is for malting quality.
With limited Australian exports, Pearson said Canada could sell between 800,000 and one million tonnes of barley to the Chinese.
And Australia isn’t the only barley producer having trouble this year.
Scab and vomitoxin have hurt crops in the Red River Valley of North Dakota and Minnesota – an area that accounts for about half of the U.S. malting barley crop.
USDA is forecasting U.S. imports of 1.3 million of tonnes of barley this year. It’s assumed all those imports will come from Canada.
