Grain Snippet: Barley Rebounds
Barley prices since late December have forged $17/MT higher, now trading at $317/MT in SA’s Outer Harbour port zone. Whilst this price increase has an underlying fundamental basis, there has also been price strength noted in the global feed grain complex. This strength stems from an increase to global corn prices, causing barley to become a cheaper, and more competitive, feed grain alternative to some destinations. Furthermore, with Russian barley production down 20% y/y for 24/25 (estimated at 16.25MMT) due to late-season dryness, it leaves Australia and Argentina as competitive supply origins for key importers.
Locally, exporters are beginning to accumulate for their fast-approaching vessels with strong buyer competition across most major SA ports. The local delivered market remains at circa $330/MT in the Adelaide zone, with premiums to some upcountry feeders at circa $350/MT. However, local markets delivery time frames are beginning to push to post-seeding.
US corn futures prices have seen an increase of about 42USc/bu since late December. The increase in corn pricing is due to tightening of global corn stocks to end 2024, following revisions to the US corn crop final reported yields. This bullish sentiment has been unified via a poor outlook to the (yet to be sown) Brazilian Safrinha (second and largest) corn crop following sowing and harvest delays to their current soybean crop; the Safrinha corn crop is sown directly after the soybeans are harvested. If these delays continue into mid-February this can begin to dramatically affect Safrinha corn yields.
The market volatility brought about by US politics has been significant, with dramatic moves from speech to speech and day to day. Tariffs and potential trade wars are the leading influence, with Mexico being the largest market for US corn; the political tic for tack continues which weighs on pricing.
Barley to corn basis since early harvest has been trending downwards, this was mainly stemming from the dramatic increase to corn pricing all the while barley prices were held down via strong Argentine exports and increased eastern state production in Australia. This down-trending basis has recently slowed, recovering slightly; it reached basis lows of 0USc/bu in mid-January before beginning to strengthen to circa 20USc/bu as of Feb the 3rd.
Malt barley has now come back to evens with BAR1 grades in most SA ports, with some exceptions to the Outer Harbor and Wallaroo port zones. This decrease/waning of malt premiums is not unusual to see post-harvest, often occurring once the initial demand is filled and local malt users approach full seasonal coverage.
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