Australian barley finds a new home in Mexico after China ban

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Despite the trade tensions with China and the massive tariff imposed on barley exports, there are some good signs for grain growers on international markets.

West Australian grain handler CBH Group has sent a shipment of malt barley to Mexico, which is a first for the Australian grains industry.

The shipment of 35,000 tonnes of malting barley, used to make beer, was loaded at the port of Albany in WA and sent to Mexico.

CBH Chief Marketing and Trading Officer Jason Craig said other shipments could follow.

“While it is early days, this shipment to Mexico signals a potential new market for malting barley. However, this will need to be developed over time.”

There is an opening in Saudi Arabia, which is the second-largest barley market globally, importing approximately 7 million tonnes each year.

“Australian feed barley has become very price competitive compared to barley from alternative origins, such as Russia and the Ukraine that have dominated exports to the country for the past few years,” Mr Craig said.

Feed sector boost

There is good news for Australian growers in the feed sector as well.

Australian feed barley exports to Thailand and Vietnam are expected to double in 2020-21, according to CBH.

WA produced a big crop of barley, but growers were alarmed late last year when China, their biggest market, imposed a massive 80 per cent tariff.

That dispute is heading to the World Trade Authority for resolution.

Russian trade ban benefits Australia

World wheat prices are also set to rise after Russia imposed a second levy on exports and cancelled some contracts for Russian wheat.

Commonwealth Bank Commodity Analyst Tobin Gorey said it was all being driven by domestic politics.

“The Russian President doesn’t want to see food prices in Russia continue to increase and he wants to keep more grain for local use.”

Russia is the world’s biggest exporter, so this latest action is expected to push world prices up.

“There will be a reduction in the amount of Russian wheat sold into the Middle East and South East Asia and it will pave the way for Australian grain sales,” Mr Gorey said.

World wheat stocks have been running down over the last few years and Australian farmers on the eastern seaboard have had a big harvest.

It is a serendipitous moment, according to Tobin Gorey.

After three years of drought and the worry over the China trade dispute, it is good news for growers.

“We are still recovering from a three-year drought so having a bumper harvest and good prices are exactly what Australian farmers in Qld, SA and NSW were hoping for,” Mr Gorey said