China's new crop barley buying spurs French prices on 1m mt rumours

The loss of supply from Australia has sparked an unusually early start to China's buying of new crop feed barley, with key European exporters set to gain market share, leading to a surge in French barley prices, market sources told Agricensus Wednesday.

China kicked off its buying for new crop feed barley at least a month earlier this season, with at least four and as many as 15 vessels of optional origin French or Ukrainian barley are thought to have traded for July-August 2021 shipment.

If confirmed, the volume could amount to around one million mt, with the trade reported to have been done at prices around $275-$280/mt CFR range.

This has already led to a surge in the pricing of the grain, with French barley values surging from an €8/mt discount to the September Matif wheat contract to reach parity with the contract in just a few days.

“Usually they start in January-February, it is clearly not (normal). The French market is on fire, the premium up +€8/mt in 3 or 4 days,” one trader said, but the onset of a trade dispute with Australia - the major regional barley exporter - has cut out a significant supply option.

“I don’t know how many vessels (have been bought) but it must be a lot. July-August suddenly started paying even (parity) with the Matif September 21 CPT in Rouen, Dunkerque and La Pallice,” a France-based broker said.

The demand has even pushed up prices in French river ports, as brokers said they were being asked to source barley for transport to big ports.

“Some buyers even asked me to buy barley July-September on trains, €13/mt higher than FOB Moselle prices. They are ready to pay €175/mt. I think transport to Rouen is around €18/mt. Plus, the fobbing cost,” a broker said regarding the extra costs faced by anyone looking to build cargoes from the rail market.

Meanwhile, in Ukraine sources reported that there are some buyers currently sniffing around for new crop offers with buying ideas heard at around $230/mt FOB

However, so far sellers are not showing offers yet.

China is the second biggest barley importer worldwide, with the USDA expecting 2020/21 marketing year imports at 6.5 million mt.

Australia, Ukraine, France and Canada are the main suppliers, although earlier this year China slapped an 80.5% anti-dumping and anti-subsidy duty on Australian barley along with 3% import tariff, cutting it off the list of suppliers.

Also, potential supply options from Ukraine have also decreased, as Kernel - one of the biggest Ukrainian exporters - had its ability to export barley to China temporarily suspended on October 24.