China's tariff removal benefits barley exports
By Brad Cullen
10th August, 2023
As China have announced they will drop the 80 per cent tariff they had applied to the importation of Australian barley. The tariffs were imposed in May 2020 after China alleged dumping of Australian barley below the cost of production.. What this now means for Australian barley growers will somewhat depend on what happens to the crop size as harvest ‘23 marches ever closer –Which areas will have grain to export versus which areas have grain that will be needed to fulfill domestic markets?
The export orientated regions of Australia – namely Western Australia and western South Australia, saw markets move up last week following the announcement. The east coast didn’t see the same up-tick in prices, namely because east coast markets already have premiums built in to price barley stocks into domestic markets.
The lifting of these tariffs is largely seen as beneficial for new crop demand and brings barley back into the fray on an export front.
Speaking of exports, it’s been quite noticeable of late that east coast, Australian export business has slowed down following the commencement of the Northern Hemisphere harvest. This is broadly expected to continue (on the east coast) right up to the beginning of harvest ’23. This is occurring because domestic values for grain on the east coast of Australia are at a premium to export markets currently. This means that grain stocks should provide a decent carry into harvest ’23.
An example of how much of a premium domestic markets have been at versus export values is that a number of vessels loaded with barley have been shipped from Western Australian ports into Queensland. This barley was then trucked inland and consumed by the large domestic market there.
Weather is king
As ever, rainfall is the most important input for any farmer. Right now, crops look amazing in Victoria, southern NSW and large parts of the Central West of NSW. Looking great in August and having a great harvest result in November/December depends on both rainfall and temperature playing the game between now and then though.
There have been some isolated reports of frost damage occurring in early developed crops to the northern Mallee region of Victoria, however most of the crop isn’t at a late enough growth stage to be affected by frost yet.
Ongoing urea shortages have seen some growers struggle to get “N” which have held crop growth back somewhat – it remains to be seen if, by holding crops back, it works out to be a positive or a negative.
Canola rollercoaster continues
Growers who have held canola since harvest time last year, have seen a wide range of price movement. The last month hasn’t been any less of a ride either. Early July, reports started circulating that the Canadian Prairies (a major canola producing area) was dry and that some extreme heat was forecast – markets rallied as a result. We then saw the weather forecast improve – markets declined again – albeit to a price that would still rate highly on the decile charts.
New crop markets for canola remain at above average levels. This combined with lower nitrogen costs this year, should see decent gross margins achieved – as long as spring is kind.
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