Australian grain: barley offers shrink, China thirsty

Hot and dry weather in the east of Australia may substantially cut malting barley export availability in the 2004/05 crop season, just as top buyer China enters its main purchasing period, a leading exporter said.
An official of east coast grains handler and exporter GrainCorp Ltd said that Australia, the world's biggest exporter of the grain, might have just 1.5 million tonnes to export from its current crop.
It exported 2.1 million tonnes in the year to October 30 this year. Until temperatures soared above 30 degrees Celsius (86.00 Fahrenheit), Australia's barley harvest, which just got underway, was expected to produce malting barley exports of up to 2 million tonnes, GrainCorp said.
"However, the biggest question we are all trying to answer is whether New South Wales and Victoria (states) will have any malt barley to export," GrainCorp said in a market report.
Australia's sudden loss of supplies of up to 600,000 tonnes comes at a time when Australia's biggest malt barley buyer, China, is set to kick off its main purchasing season.
China bought about 400,000 tonnes of Australian malting barley in the second half of the marketing year to October 30. This was about 20 percent higher, compared with the same year-ago period, when beer demand in China was hit by the SARS outbreak.
The scare kept many restaurant goers at home and had a big impact on retail sales.
Second-half purchases brought China's total imports of Australian malting barley for the whole of 2003/04 to around 1.2 to 1.3 million tonnes, figures from GrainCorp show.
Until recently, China had been holding back malting barley purchases because of an expected global oversupply of both malting and feed barley, it said. But the recent weather woes in Australia, along with frost and a cool growing season in Canada, have begun to boost barley prices on a cost and freight basis in China by about US$15 a tonne to high US$190s, GrainCorp said.
The official said global prices were expected to remain firm in coming months. In September, the Australian Bureau of Agricultural and Resource Economics forecast that the country would produce 7.29 million tonnes of barley in the year to March 31, 2005, down from the bumper crop of 8.63 million tonnes a year.