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Saudi barley import recovery to prove more tepid than thought


Barley imports by Saudi Arabia, historically the world’s top buyer, having fallen last season by more than had been expected, will this season show a smaller recovery than had been thought.


The US Department of Agriculture’s Riyadh bureau restated an estimate of 6.50m tonnes Saudi Arabia’s barley imports in 2018-19, as ended in June, a drop of 1.20m tonnes year on year.


Besides being an eight-year low, that figure is 1.10m tonnes below the USDA’s official estimate, and came for a season in which unusually persistent rains boosted domestic grassland, and supplies of locally produced fodder.


“Good pasture conditions led to a significant drop in barley consumption last winter,” the bureau said.


‘Sharp decline’

And for 2019-20, the bureau downgraded by 1.0m tonnes to 7.0m tonnes its own forecast for Saudi Arabian barley imports – taking the figure further below the 8.50m tonnes expected by the USDA.


The bureau noted that the Saudi Grains Organization, the state grain importer, had signed two import contracts totalling 1.74m tonnes for the first four months of the season, “a reduction of 46.3% compared to the 3.24m tonnes purchased in the same period a year earlier”.


“Local animal feed experts attribute the sharp decline in the kingdom’s barley imports for the first four months of the current market year due to adequate reserve stocks.”


While the bureau in fact pegged Saudi barley inventories at 1.54m tonnes at the close of last season, a drop of 11% year on year, “Sago appears to be comfortable with world barley supplies and does not see the need to hold large ending stocks”.


China downturn too

The estimates bode ill for world trade in barley at a time when purchases China, the second-ranked importer behind Saudi Arabia, has seen its own needs for feed grains reduced by the huge shrinkage in its hog herd forced by an African swine fever epidemic.


Chinese barley imports for the first half of 2019 fell by 30% to 3.08m tonnes, customs data show – a dynamic seen fuelled too by trade ructions with Australia, historically the top origin for Chinese supplies.


Beijing last year begun an anti-subsidy probe on Australian barley, an investigation which followed Canberra criticism of China’s growing influence in the south Pacific region.


In contrast to these softened import needs, world barley production this year is forecast by the US Department of Agriculture rising by 12.4m tonnes to an 11-year high of 151.9m tonnes.


Price impact

Saudi’s reduced import needs have been seen by some commentators, including the USDA’s Riyadh bureau, of fuelling a decline in world barley prices.


Sago’s latest barley purchase, of 900,000 tonnes in late June, was priced at an average of $193.64 per tonne, with a May purchase of 840,000 tonnes, also for 2019-20 delivery, at $193.03 per tonne.


In March, the organisation paid $211.86 a tonne for 730,000 per tonne for barley, while in November last year paying (mainly) Glencore $266.83 per tonne for 1.02m tonnes.


Barley vs corn

However, top exporter the European Union, at least, is expected to see a more buoyant domestic market for barley, in the face of setbacks to production in some countries of rival feed grain corn, of which imports are seen falling too.


The European Commission forecasts EU imports of corn – despite their record start to the season - falling by 8.6m tonnes to 15.5m tonnes in 2019-20, while the bloc’s feed use of barley grows by 3.2m tonnes to 38.2m tonnes.


CRM AgriCommodities has noted how maize “has become very expensive compared with wheat and barley”.


Agritel on Wednesday reported the price of corn delivered in Bordeaux at E169.00 per tonne, up 1.2% over the past two months.


Prices of feed barley delivered in Rouen have fallen by 4.9% to E154.00 per tonne over the same timescale, a drop in line with that of wheat, worth E166.00 per tonne.

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