WA Market Wrap - December

By David Cripps

With the 2020 harvest quickly drawing to a close, the surprises for the year have kept coming, albeit this time for most its certainly been an agreeable one with yields undoubtedly better than expected in most cases. With average seasonal rainfall about the same or in many cases slightly lower it’s been a fantastic outcome as the crop in total now is going to be better that 14 million tonnes. A testament to WA growers and the productivity they can achieve with innovative farming practices that are world renowned. After farming many years myself in a marginal rainfall area, I understand that there is always someone who misses out however for most WA growers they will remember the 2020 crop as one that pleasantly surprised.

The past couple of months grain markets have been difficult to predict with many factors influencing the fluctuating prices, the ever present Covid-19 virus, China ambiguity, Russian weather and their expected export quota to curb inflation all playing a part to effect prices and unfortunately we have seen wheat and canola prices fall with this uncertainty. Wheat/canola prices were $50 AUD FIS off the highs that were available at the start of harvest. Hopefully markets can find some positivity in the new year to see these prices move higher. Barley has also been erratic however the Saudi market seems to have put a base in the feed price. The malt market is anything but stable with demand still uncertain into the foreseeable future however even though the premium is limited for malt varieties this season, particular malt varieties are still very important to the market so think it’s a timely reminder of this before we go into next season.

Malting Varieties WA

Quality malt manufacturing commences with supply of good quality malting barley. Given that no two seasons are the same, let alone two paddocks from different soil types, rainfall and input regimes, the challenge to produce a consistent malt specification is very much assisted by the inherent attributes of each malting barley variety.  Each year the malting industry work and participate with industry groups such as GIWA to ensure they have a range of malt varieties, and critical mass of supply, that are correctly segregated.

Malting barley variety together with other levers the technicians can pull in the production process allow local WA malt houses to supply a consistent specification to over 25 export countries from their malt plant located at Forrestfield in Western Australia.  Key export markets by volume are the Philippines, Vietnam, Thailand, Japan, Singapore and South Korea.

Where desirable varieties are in short supply these will lead to strong premiums domestically, however, there will generally be a premium paid for malting varieties that have narrower specifications and chemical/herbicide declarations consistent for food supply.

Bass and Flinders are highly sought-after varieties as certain brewing customers and countries have restrictions on the use of additives. These two varieties historically have high inherent enzymatic properties.  If the seasonal conditions are supportive for malting selection, then demand for Bass and Flinders could fall away as generally the other varieties may contain enough enzymatic power.   Early premiums could be paid for these varieties as they are easily adaptable to almost all export customers.

The volume of Spartacus as percentage of the barley crop planted surprised the industry in 2019/20.   It clearly dominated barley production, both in Western Australia & on a national basis.  As a variety it will be the workhorse across most malt plants.  However, the dominance of an IMI tolerant variety has not been without issues, Japan and Korea initially did not have established MRLs for any of the IMI chemicals. Japan still does not have an MRL for food use (malt) for Imazapyr, and therefore we do not expect to be able to use Spartacus for this market in 2020/21.  The malting qualities of Spartacus are acceptable, it will likely only reflect a base malt premium due to its abundance.

La Trobe is a well-accepted and established variety, both into malting markets but also the Japanese Sochu market.

Planet supply into the malt houses remains low, and much of it this 20/21 season is of feed quality. Malt houses at present have a specific demand for this variety, this could increase as broader utility to other customers of it quality’s acceptance gradually increases.  Like La Trobe it provides some diversification and could obtain a premium over base malting barley.

Varieties that do not have enough critical mass in terms of volume will likely be superseded.  In 2020/21 it appears that Scope and Baudin will likely fall into this category. Compass has not had a malting barley segregation in Western Australia given its more suited to domestic brewing consumers that have most brewery assets on the East Coast.

Another factor growers should consider is that while sustainability certification has been in place for canola for the past decade, the demand for sustainability certification of other grains is rapidly growing. Buyers and processors of barley, wheat and pulses are also looking for assurances that their grain-based inputs are produced in a manner which meets community expectations for environmentally, socially and economically sustainable production. This ISCC sustainability will be a requirement for all Cargill malt purchases into the future so our end users are confident in the sustainability of this barley moving forward.

At this busy time please take care and stay safe, look after your families and importantly yourself. Have a very merry Xmas and let’s hope that 2021 will be a cracker of a season for everyone.