Australian barley prices reacted in earnest to the news China will remove the import tariff it had imposed on Australian barley.
After the announcement at about lunch time eastern standard time on Friday last week, Australian barley prices traded $30-40 a tonne higher through the afternoon.
It was a frenzy of demand, with 25 different buyers purchasing 115,000t of barley through Clear Grain Exchange on Friday. More buyers were searching and trying to buy barley offered for sale.
In many cases barley offered for sale by growers on the exchange was trading up to higher bid prices as buyers outbid each other to secure the grain.
The demand storm continued until some buyers had to pull up stumps when they had exhausted available funds. Many buyers returned Monday to purchase barley at prices above Friday levels.
It was good to see growers achieving their price targets. Market commentators had been quoting the Chinese market to be worth $30-$40/t to Australian barley prices which came to fruition quickly.
If we use European feed barley as a global price point, it has reportedly been quoted at US$247/t Free on Board.
US$247/t FOB ex-WA equates to about $340/t Free in Store WA in Australian dollar terms which is where prices have traded up to at time of writing.
Australia has a freight advantage over Europe to export grain into China, so at current global values, Australian barley prices are supported at the new levels.
A positive price environment in Australia was also evident across other commodities last week despite weakness in global futures. Uncertainty remains in major producing areas of the world.
Recent drone attacks on vessels in the Black Sea on top of damage to grain infrastructure is increasing uncertainty over Russian supply.
At a minimum it is likely to see increased costs of execution from the region as insurers and shipping companies increase premiums or pull out of the region all together.
Russian wheat has been the big bear in global grain prices as they export huge volumes at relatively cheap prices to the rest of the world.
In another development, reports continue that India is considering cutting or removing its 40 per cent tax on wheat imports.
This would be supportive to prices and follows them halting their largest category of rice exports recently to try and stabilise their internal prices.
Demand remains robust across Australia for all grades and commodities. Offer grain at your sales price to determine the value of your grain rather than relying on published bids for price discovery.
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