Farmers should temper hopes for a revival in the malting barley market, despite the firmer Chinese demand which has lifted some price forecasts, grain traders have warned.

Australia's AWB lifted forecast returns from its 2009-10 Baudin/Gairdner malting barley pool by Aus$2 to Aus$269 a tonne.

The move came hours after the Canadian Wheat Board raised the forecast for its malting barley pool by Can$3 a tonne to up to Can$211 a tonne.

Both groups cited firm Chinese orders at a time when late season storms set back some Australian malting barley crops, with a heatwave dogging others.

Quality vs quantity

There were "concerns generally about the volume of malting barley that will be available from Australia", AWB general manager commodities Mitch Morison said.

CWB said that the crop, while larger than last year, had "experienced several weather events that have caused downgrading".

"This will limit the availability of high quality malting barley from Australia."

However, Chinese buyers' eye for a bargain meant their orders looked likely to tumble if prices rose far.

"China has maintained steady purchases of malting barley but remains a very price-sensitive buyer," the board said.

"Many end users [are] willing to switch to lower-quality domestic and imported barley if prices for higher-quality imports rise."

'No shortage' 

The comments were echoed in the UK by David Sheppard, managing director of grain merchant Gleadell, who said that Chinese buyers were particularly flexible in their malting grain requirements.

The European market faced the problem of heavy supplies, with "no shortage of barley, even malting barley", he told Agrimoney.com.

There may be, nonetheless, better prospects ahead, with European farmers widely reported to be switching away from barley thanks to low prices, which will lose intervention support next year.

"Buyers in the EU are beginning to show an interest in crop 2011 and the talk is of a €20 [a tonne] premium over 2010 nominal values," the merchant aid.

"Our advice on marketing remains: market your malting barley sooner than later if you have to move your produce in year 2010, but there is no panic for the marketing crop 2011."