AUSTRALIAN barley exports to China have risen sharply in July after dropping to virtually nothing in June after the Chinese government announced its 80 per cent duty on imports from Australia as retaliation for alleged dumping.
Lloyd George, AgScientia analyst, said recently issued Australian Bureau of Statistics (ABS) data showed Australia had exported over 90,000 tonnes of barley to China in July after just 3500 tonnes in June.
In May, when the Chinese announced the duties on Australian barley, there was 243,000 tonnes exported.
Mr George said there was no way Australian barley could compete on the international market with the duties imposed so it was likely the grain was heading to Chinese free trade zones (FTZs).
China has implemented a network of 18 FTZs across the country where duties do not apply.
This means barley can be sent from Australia to a Chinese FTZ and avoid the prohibitive duties, although if it is then sent to another part of China under normal Chinese financial rules the duties must be paid.
However, it can then be processed in the Chinese FTZ and exported either as malted barley or as malt, with China a major exporter of malt.
Nearly all of the barley that headed to China was malt quality rather than feed, which as does not need to be processed is not practical to send to an FTZ.
Mr George said he was not sure at this stage whether the high volume of July exports would be replicated or whether it was a one-off.
"A large proportion of the tonnage is a bulk shipment, a Panamax load of barley out of Melbourne, which accounts for a bit over 50,000 tonnes," Mr George said.
With such low numbers of vessels exporting the grain it means that the total tonnage could be subject to significant monthly volatility.
It demonstrates that China, even without access to mainstream destinations, could remain an important home for Australian malt barley and that the ban handed out to Western Australian exporter CBH will have much more than just symbolic importance.