Despite the dry weather and the huge increase in domestic demand for feed grain in the south over the past year, feed grain prices have found it difficult to find support. As the slide in barley continues, here we look at why.
In September, we are due for another Australian crop report, but for now, we’ll have to use the June data. Thanks to the July rain, and some more forecast for southern cropping areas over the next week, the September crop report figures shouldn’t change much.
Figure 1 shows that the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) is forecasting a small decrease in barley production in 2025-26. East coast barley production is expected to be similar to 2024-25.
We know that historically, it takes a small crop to see barley detach itself significantly from global feed grain markets. The main global feed grain is corn, with wheat another. Barley is small in global production terms.
Like wheat prices, corn has been on the slide over the northern hemisphere summer, as crops develop without issue. Further pressure on feed markets has come from the winter wheat harvest, which has brought in yields that were largely expected.
With weaker corn and wheat prices, barley has little chance of bucking the trend. Figure 2 shows that since a June price peak, on the back of domestic demand, barley has weakened by around 10% delivered to Geelong. In WA, barley has held steady at higher prices, although off the peaks from earlier in the year.
While the barley market shouldn’t head back to the doldrums seen after the China tariff issues in 2020, it could move to a three-year low with good supply. Geelong barley is currently around $300/t, which is a premium to Chicago Soft Red Wheat, which is around $285/t.
It will take a sizeable cut in barley production to see prices move too much higher independently of global feed grain markets. The last time we saw this was in 2018-19, when East Coast production fell to 4mmt.
What does it mean?
Like wheat, it will take some issues with world corn or cereal crops to see any real upside in barley prices. The market is comfortable with cereal production at the moment, and unless a weather disaster befalls Black Sea spring crops or US corn crops at harvest, we’ll be waiting until later in the year for any real upside.
Key Points
- Barley prices have dropped around 10% since June despite strong domestic demand.
- Global corn and wheat weakness is dragging barley lower, limiting upside potential.
- Significant production cuts or global crop issues are needed for prices to rise.
Click on graph to expand
Click on graph to expand
Data sources: ABS, DAFF, ABARES, Bloomberg, Mecardo
