World barley prices remain under pressure from a significant feed grain supply

Despite the decrease in the world harvest of barley, prices for it remain low due to weak demand and a record world harvest of corn and other grains.

According to the IGC, in 2023/24 the global grain harvest will reach a record 2.3 billion tons, which will exceed the previous season by 2%, primarily due to the recovery of corn production.

In the January report, USDA experts reduced the forecast of world barley production in 2023/24 MY by 0.7 million tons to almost the lowest figure in 10 years of 142.9 million tons (151.6 million tons in 2022/23 MY), in particular for the EU - by 1 to 47.5 million tons. Ending stocks of barley are expected to decrease compared to the previous season by 9.6% to a 10-year low of 18.4 million tons.

Unfavorable weather in Northern Europe and Eastern Australia led to a deterioration in the quality of malting barley and a decrease in its volume. This year in the EU, prices for brewing barley with delivery to the factory reached 240-260 €/t, and by 50-60 €/t exceeded the prices for fodder barley. However, the trend of recent years to reduce beer consumption reduces the demand for malting barley, so it is not worth expecting an increase in prices for it at the end of the season.

Winter barley crops in Europe are in good condition, so forecasts of barley production in the next season have been increased to 54.5 million tons. But the final figure will depend on the area sown with spring barley and the condition of the crops during the season.

In Ukraine, the demand for malting barley is also low. Processors purchased stocks needed until the end of the season and lowered prices from UAH 8,000-9,000/t with delivery to the plant to UAH 7,000-7,500/t, buying small batches of high-quality grain.

Prices for fodder barley in Ukraine were supported by the intensification of supplies to China, which in 2023 doubled imports of barley compared to last year, to 11.3 million tons, in particular in December - by 36.6% (compared to November) to 1 .66 million tons. This was due to the recovery of imports from Australia, which again became the largest supplier.

Against the background of strengthening export demand and the growth of the dollar against the hryvnia, the prices of fodder barley for delivery to Black Sea ports during the month increased by UAH 600-1,000/t to UAH 6,100-6,300/t or $150-153/t. Processors have raised prices to UAH 5,000-5,500/ton with delivery to the plant.

Since the beginning of the season, Ukraine has exported 1.273 million tons of barley (1.788 million tons last year) out of the USDA's forecast of 2.1 million tons. An increase in the supply of barley from Argentina, which has completed its harvest, will reduce prices and demand for Ukrainian barley.

According to BAGE, in 2023/24 FY Argentina harvested 5 million tons of barley, which is 16% higher than the 2022/23 FY harvest and 11% higher than the 5-year average. The average yield increased compared to last year by 41% to 4.28 t/ha, which will increase the global supply.