Read our most recent market updates below!
Global Barley crops mostly (but not all) favourable
It’s natural to focus mainly on crops close to home. That’s especially the case for barley, since a good portion of the crop is used within western Canada. Still, one of the lessons from 2020/21 is that the export market was the reason why barley prices hit record highs. That’s why it’s important to keep one eye on the Canadian barley crop and one eye on production elsewhere.
There’s still a lot of growing season ahead for the western Canadian barley crop and so far, conditions are fairly decent, but that’s certainly not universal. In Saskatchewan, provincial crop ratings are above average but barley in northern regions is looking a lot better than further south. The overall crop rating for Alberta barley is also above average but the centre of the province is in better shape than the south and north. And like we said, it’s still early.
Normally, the US barley crop doesn’t have much impact on the market but it could this year. Conditions in northern US states are the worst in over 20 years and yields will be down sharply. The US hasn’t imported much barley from western Canada for the last five years or so, but that should change in 2021/22.
Barley crops in other key exporters are looking better. In western Europe, there are a few problem areas but not many stresses across much of the continent. In particular, key exporters such as France aren’t facing any meaningful difficulties. The EU remote-sensing group, MARS, recently raised its yield estimates further for both winter and spring barley, with the overall yield now 4% above the 5-year average.
In the Black Sea region, conditions are also positive, with the winter barley harvest just about to get underway. Rainfall has been almost too much, raising concerns about disease, but the tap seems to have shut off the last week or two, allowing the crop to finish well.
There are some areas of concern in Australia but overall, the crop is looking good, especially in Western Australia, where most of the barley exports come from. Of course, Australia isn’t exporting barley into China right now, but it is filling demand in a number of key markets and reducing the strain on global supplies. The other key southern hemisphere exporter is Argentina and conditions there are more mixed.
China is still the dominant factor for the global barley market, taking nearly 10.8 million (mln) tonnes in 2020/21. And with Australia out of the running as a supplier, other countries have to fill the gap. In the absence of Australia, the main origins have been Ukraine, France, Canada and more recently, Argentina. So far, there aren’t any serious warning signs about these barley crops so there will be strong competition for the Chinese market.
The bigger question is how big Chinese demand will be in total for 2021/22. Since September 2020, China has often imported over a million tonnes of barley per month. We expect some of that increased demand was caused by Chinese crop losses in 2020, which won’t likely recur in 2021. If that’s the case, there could be more barley chasing a smaller market in 2021/22, and that wouldn’t be helpful for prices.