RIO DE JANEIRO, BRAZIL – According to official data, the area under barley in the 2021/22 season reached 1.5 million hectares, 260,000 hectares more than last year. As the harvest is in its final stage, the national average yield is expected to reach 37 qq/ha, which means that a production of 4.5 million tons can be achieved, 500,000 tons more than in the previous cycle.
By the end of 2021, 50% of the production should already be marketed to take advantage of the good prices. According to the Siogranos platform, malting barley was sold at an average of US$263/t in December, with peaks of US$267/t, while feed barley paid a national average of US$228/t, up from November.
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FIRM INTERNATIONAL MARKET
The high prices achieved by Argentine producers are a result of poor harvests in several producing and exporting countries and the increase in feed grain prices. In the December 2021 report, the USDA lowered world production to 145 million tons, down 14 million tons from the previous season (-9%), mainly due to lower production in Russia, Canada, and the European Union.
China has been a substantial importer in recent years, resulting in a global stock-to-consumption ratio that is the lowest in the last 38 years. China is expected to consume 11.8 million tons of barley in the 2021/22 cycle and have an import requirement of 10.1 million tons, a record for the Asian country, replacing Saudi Arabia as the leading importer.
FOB prices for Black Sea feed barley originating in Russia and Ukraine are currently at historically high levels of US$300/t. Just a few months ago, at the peak of the harvest in these countries, they fluctuated between US$210/t and US$250/t.
LOCAL MARKET ACCOMPANIED
Argentina is no stranger to international behavior, and the FOB price for feed barley was US$302/t in December, according to the Ministry of Agriculture, Livestock, and Fisheries.
This figure gives a theoretical FOB price for the producer of US$250/t, which was available until a few days ago and is currently between US$235/t and US$240/t in southern ports, at a discount to theoretical parity.
While it may be that official prices are higher than the real market price, on the positive side, exporters have reported purchases for 1.4 million tons and sales abroad for 1.73 million tons, opening the possibility that they will pay a little more at some point. Timing is key, as there are no further shipments beyond March for now, so marketing could be difficult.
For malting barley, the theoretical FAS for export is US$270/t, which is in line with what is being offered if the high-quality requirements are met, especially in terms of protein content (above 10%) and caliber (above 85). In contrast, the malt price for Quequén is around US$260/t, with lower quality requirements.
In general, good yields had a detrimental effect on protein content, while in some areas, frost and lack of water affected quality, so each producer must decide for himself whether to supply for export or the domestic market.