THE COARSE grains complex remains a relative positive for Australian farmers confronted with low prices this season.
Trading off uncertainty surrounding corn prices, feed barley still remains in the unusual position of being higher priced than ASW wheat in many port zones.
Feed 1 barley prices are at around $190/t, while the best price for ASW on Tuesday was $193/t, but in many areas it was below F1.
GrainCorp pool manager Stuart Clarke said the international coarse grains balance sheet was providing support for prices.
“It’s mainly due to the tightness in corn supplies, and this recent uncertainty in South America has kept this momentum going.”
He said farmers had felt there was comparative value in feed barley values over the past couple of months.
“As a rough rule of thumb people seem to be selling their barley for cash and pooling their wheat.
“Feed barley is at a premium to some of the lower grade milling wheat, which certainly is not a normal occurrence.”
“It comes down to the balance sheet, wheat is loose and corn, and by extension feed grain, is tight.”
AgFarm account manager Mick Phelan said feed barley values were holding up well.
“F1 is really pretty well priced, considering the prices we are seeing for the bottom end milling grades of wheat,” said Bendigo-based Mr Phelan.
He said there was potential for further improvement in the future as well, which bucks the normal trend of the Australian barley market.
“Traditionally it pays to get rid of all barley, especially malting, but also feed, when it comes in, but at the moment there is not a lot of barley about.
“Bids for prompt delivery of over $200/t have been quoted recently, so the current price is good, and there’s also reasonable prospects moving forward, so farmers have options with their barley.”
Mr Clarke said the reason there had not been large scale substitution of usage into wheat, which provides better feed quality than barley, was the demand from the US ethanol market.
“These plants cannot switch into wheat without great difficulty.
“Those that can swap over have, but there’s some inelastic demand for corn.”
However, even in feed markets where wheat could be used, such as the Middle East, there remains a strong demand for Australian feed barley.
“It’s hard to assess what places like Saudi Arabia are doing, but they have always been the biggest importer of feed barley, both of Australian and world feed barley and that looks set to continue this year, even though there is cheap wheat around.”
Mr Phelan also said he believed there would be good demand from the Middle East for Australian barley.
AWB acquisitions manager Jon White said the company had recently secured feed barley sales, both to the Middle East, and also to Asia.
Mr Clarke said analysts were projecting a large sorghum crop out of northern Australia, but added this would primarily only influence prices in NSW and Queensland.
“Typically sorghum demand and production is fairly fixed, so we feel sorghum will just price itself into the feed ration of northern end users and won’t be a massive driver of price in its own right, even though there is likely to be quite a bit around this year.”
In terms of the malt barley market, Mr Phelan said there was still a spread between feed and malt, even in those less highly regarded as malting varieties.
“It’s a case of watch this space on malt, certainly there is the potential for a rise in malt values in coming months given current market dynamics.”
Mr White said AWB had lifted its barley pool returns by $4-7/t last week after rises in the corn price.
“Recent increases in US corn and wheat futures have resulted in a firming of Australian feed barley prices.”
“We are currently seeing good demand for Australian feed barley and we have secured recent feed barley sales to customers in Asia and the Middle East.
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