China has snapped up large tonnage's of Australian malting barley in the past two weeks, strongly driving up prices on concerns of a supply squeeze. This has brought China's purchases of Australian malting barley, used to over 1.5 million tonnes this year. "They are back with a vengeance," OLE House, manager, coarse grains, for exporter GrainCorp Ltd, told Reuters.
After buying around 300,000 tonnes of Australian malting barley in May and June, Chinese purchases had waned. But China returned strongly in the past couple of weeks to buy around 150,000 tonnes of Australian malting barley, driving delivered prices up to $200 a tonne from $175 two months ago. "It's a phenomenal jump," said Houe. GrainCorp is now sold out, although other Australian exporters still have limited old-crop malting barley supplies.
"There have been some recent sales by Australian suppliers, including ourselves," said Nigel Officer, general manager, marketing, for ABB Grain Ltd. With supplies restricted from Canada and Europe, China is expected to buy more from Australia in the near term, he said, adding that there was room for further price increases.
GrainCorp's Houe believes that prices have reached a level where China may soon start to ration purchases from Australia and to start substituting lower quality grain. Houe expects the national crop coming in at just below 6 million tonnes, having initially expected a harvest of up to 8 million tonnes.
Last season Australia produced 9.9 million tonnes, while the five-year average, over drought-affected years, is 7.4 million. "Right across the country there's a dire need for rain," said Officer, who expects an average or slightly below average crop. "We are waiting desperately for a better than normal spring."
Australian representatives of leading global grain firms, eager to break into the wheat export monopoly operated by AWB Ltd, this week admitted not enough had been done to sell their message of the benefits of a more competitive system.
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