Although affected by the drought, barley withstood the onslaught better

The crop was estimated at 4.5 Mil MT, 20% less than in 2021/22. Compared to the 50% year-on-year drop in wheat, the retraction is less drastic. From a commercial point of view, 2023 started with a good pace of grain barley exports.

In recent years, the barley planted area and production has grown strongly. The drivers of this growth have been its consumption as animal feed, the impulse of the brewing industry, the explosion of Chinese demand and the reconfiguration of the international grain trade.

The planted area was estimated at 1.8 Mil Ha, 10% higher than last season, although production totaled 4.5 Mil MT with an average yield projected at 2.85 MT/Ha. This is a 20% drop in production compared to the previous season, and is largely due to the fact that yields that have fallen by 28% since last year, and by 24% compared to the last five-year average. Needless to say, the dramatic drop in productivity is due to the devastating effect of the drought in Argentina, which also affected barley indicators.

With a reduced supply due to the climatic phenomenon, the available grain will tend to be distributed between the growing domestic consumption—led by both the brewing industry and feed use for animal consumption—and an export demand that kicked-off the year at a steady pace, although the volumes shipped are expected to be lower than those of the 2021/22 season.

Regarding domestic consumption, it’s worth highlighting the sustained growth in domestic demand for malt production. For the current period, the milling rate of malting plants is projected to be stable at 1.11 Mil MT, while for animal consumption a higher volume of feed usage is estimated compared to previous years, primarily due to the low availability and critical supply situation of other grains normally used for this purpose, such as maize.

On the exports front, a fall in the quantities of shipments abroad is projected due to the scourge of the drought that limited the available supply, although this drop is estimated to be less aggressive than in wheat. In this sense, barley grain and malting barley exports during the last season were the highest in at least 10 years and totaled 3.8 Mil MT. For the current cycle, a reduction of 21% is expected, with exports projected at 3 Mil MT between shipments of malting and feed barley.

However, according to estimates reported by INDEC, January recorded exports of barley grain (excluding malting barley) that reached USD 169.96 million, which represents the highest January income of US Dollars for this crop since 2014. This is partly due to the upward momentum in barley prices observed in recent years and is also related to the critical situation of wheat 2022/23, which led barley prices to become relatively more competitive with the other winter crop.

The Russian-Ukrainian crisis pushed wheat prices to record highs last year, which created a noticeable spread between the two cereals. At the same time, the low local wheat yields this season made wheat prices even more volatile.

Barley prices also showed downward variations in the last months, due to the beginning of the season and the influx of the harvested crop.  As of January 20^th, the official FOB prices reported by SAGyP are at 320 UDS/MT, compared to 326 USD/MT FOB wheat, at the same date last year.

Source: https://bcr.com.ar/

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