Grain Snippet: Aussie Barley Holds Post-Harvest
Barley prices have remained broadly unchanged over the last month with Outer Harbour remaining at $320/MT, with some minor ($2-$4/MT) price pull back. Much of Australian barley’s competitive pricing through the start of 2025 has been a function of the low Australian dollar, along with local basis doing the heavy lifting; absorbing approximately $26/MT of the price downside seen in the US corn swap since early January.
US corn futures had been rallying from Dec-Feb before a sharp downtrend developed following the contract high on the 19th of Feb. Following this Feb high, the contract has lost (at the time of writing 73.5USc/bu (or 11.8%). The major catalysts for the recent corn futures downtrend have been: US tariffs on Mexico and China (taking on a 5-year average, 32% and 17%, respectively). Accelerated planting progress to Brazil’s second crop along with the commencement of Brazil’s (smaller) first crop corn harvest. The potential for an increase in the corn planted area in the US due to the corn/soy fight for acres.
Major exporter barley production is estimated to decrease for the second consecutive year by 809kMT. The stocks-to-use ratio remains historically low at 8.73%. Despite the tight ratio, the global market appears to be increasingly comfortable with the tight stock scenario, similar to wheat and corn markets. Nevertheless, in this set-up a supply shock would act as a strong catalyst for these markets.
Local barley pricing has been reasonably stable (in AUD terms), with some modest price increases since the early harvest pressure. Throughout this period, corn prices have risen rapidly, quickly narrowing the corn-barley spread, resulting in barley once again becoming competitive against alternate feed grains. Recently, this spread has begun to widen following the down trending corn market. Consequently, corn has regained the mantle of the cheapest feed grain source globally and adding some price pressure.
The corn-soybean annual fight for acres remains skewed in favor of an increase to corn planted area. An increase to this area would have a large impact on US and global feed grain prices. There will be further clarification over US growers’ intentions on March 31st when the USDA releases its prospective plantings report; likely resulting in increased market volatility. If the skew to corn is larger than anticipated, the seasonal April/May strength in US corn futures could be subdued.
SA and Vic barley basis is likely to shield much of the corn price risk throughout the Apr/May window due to the limited local (state) supplies left on hand. Nevertheless, it could remain a volatile period and will require close monitoring, particularly with respect to barley’s export competitiveness. Domestic delivered opportunities for post-sowing deliveries remain likely.
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