Experts expect a decrease in the world barley harvest in 2023, but the demand for barley in Ukraine is almost non-existent

World barley prices are falling in line with wheat and corn prices, but demand remains low and brewers have ample supplies.

The market is in a balance of supply and demand as a strong barley harvest in Australia and France pressures prices, but they are supported by a reduced crop in Argentina, strong demand for barley in Canada and reduced production in Ukraine due to the war. Traders are wondering whether China will lower tariffs on Australian barley amid reduced supplies from Argentina, as China buys almost no Australian barley, although it imports wheat heavily.

According to the forecasts of RMI Analytics experts, in 2023 the world production of barley will decrease to 147.5 million tons due to the reduction of sowing areas due to competition with wheat. In Australia and the Russian Federation, after high indicators in 2022, production will return to an average level. The main 6 regions will harvest 4.5 million tons of barley less than in 2022, but stocks will remain stable thanks to reduced feed consumption and increased corn and wheat production. It is not known whether Ukraine will be able to increase the area under winter barley after reducing the area under winter barley due to unfavorable weather in autumn.

In the January report, the USDA estimated world barley production in FY 2022/23 at 149.5 million tons, which will almost correspond to the level of FY 2021/22, but will be 10.8 million tons lower than the indicator of FY 2020/21 - 160.27 million tons. Forecast the harvest is reduced for Ukraine by 0.3 to 6.1 million tons, but increased for Argentina by 0.1 to 4.2 million tons, while BAGE estimates it at 3.8 million tons. For Australia, the production forecast is left at the level of 13 .4 million tons, the EU - at the level of 51.5 million tons, Canada - 10 million tons.

Ukraine harvested 6 million tons of barley in FY 2022/23 compared to 9.4 million tons in FY 2021/22 and 7.4 million tons in FY 2020/21, while Russia increased production by 30%. Against the background of a shortage of offers and increased competition on the world market, the export of barley from Ukraine as of 01.20.23 amounted to 1.76 million tons, while last year in this period it reached 5.4 million tons.

During the 2 previous seasons, 45% of barley exported from Ukraine was bought by China, in particular, in 2020/21 MR - 2.9 million tons, in 2021/22 MR - 2.6 million tons, but this year due to the war, demand from the PRC is almost absent .

Against the background of low export demand, the purchase prices for barley in the ports of Ukraine remain at the level of $175-190/t or UAH 7,000-7,200/t SRT, while the prices for deliveries to the port of fodder wheat and corn have risen to $200-215/t.

Domestic processors are not interested in malting barley, because the enterprises are stopped due to interruptions in energy supply, and export demand remains low.

In recent years, China has begun to actively buy French barley, especially against the background of trade disputes with Australia and a decrease in supplies from Ukraine. In January, Chinese importers purchased 5-10 batches of French fodder barley in the volume of 600-900 thousand tons with delivery in the coming months, so the demand for Ukrainian barley will remain minimal for the time being.