(Agrimoney) – Barley inventories held by major exporting countries – a key pricing metric – will fall by more than has been expected in 2015-16 to a 20-year low, the International Grains Council said, cutting its harvest estimate.
The council downgraded by 700,000 tonnes to a three-year low of 23.3m tonnes its estimate for overall world barley inventories at the close of the season, representing a drop of 1.6m tonnes year on year.
Inventories in exporting countries will fall particularly far, by 2.2m tonnes to a 20-year low of 10.1m tonnes.
The level of stocks of a commodity held by big shippers – such as Argentina, Canada and the European Union in the case of barley – is particularly important for determining prices of the raw material, in that these supplies are available to the world market.
‘High input costs’
The expectation of dwindling barley stocks reflects weaker harvest estimates, with the forthcoming world harvest downgraded by 700,000 tonnes to 136.2m tonnes.
Among major, exporting countries, the Ukraine harvest estimate was trimmed by 200,000 tonnes to 6.3m tonnes – a drop of 2.7m tonnes year on year.
The forecast reflected “high input costs and limited access to credit” which had cut Ukraine’s sowings of the grain by some 12%.
For the European Union, the production forecast was cut by 800,000 tonnes to 57.7m tonnes – a fall of 2.7m tonnes on last year.
“While weather was mostly favourable in Scandinavia and the Baltic States, hot and dry conditions reduced yield potential in Spain, parts of France, Germany and Poland,” said the IGC, which timed expectations for the bloc’s wheat harvest too, by 1.2m tonnes to 148.8m tonnes.
Demand patterns
Indeed, the stocks estimates may have been trimmed further were it not for the weaker consumption prospects in 2015-16, expected to drop by 4.0m tonnes to 137.8m tonnes, thanks to dynamics in some major importing countries.
“Better pasture availability in Near East Asia is likely to reduce supplementary feed needs, with the regional total expected to contract by 2%, to 20.6m tonnes,” the council said.
“In China, feed use is forecast at an above-average 3.6m tonnes, but is nevertheless 24% lower year on year, amid competition from alternatives.”
Competitors to barley in feed include local wheat and corn, as well as imported distillers dried grains (DDGs) and sorghum, Chinese buy-ins of which are expected to hold at 9.0m tonnes in 2015-16.
Early harvest
The comments come as European Union farmers have started their barley harvest, with progress having reached parts of France, the bloc’s top producer.
The first cuts of winter barley “are showing good results both in quantity or quality”, Paris-based consultancy Agritel said.
However, it cautioned over a read-through to wheat, saying that barley’s earlier development meant it was “less hit by water deficit during May and June than wheat
