Australian barley production expected to grow despite global trade headwinds – Rabobank report

Global outlook

The price of barley has been under pressure as corn and wheat harvests in North America saw bumper crops and demand from the brewing industry suffer from economic headwinds and poor northern hemisphere weather that impacted on drinking habits, Mr Pistoia said.

However, he said, current global inventory levels are low. In the absence of a demand rebound, this is not an immediate problem, but it does pose a price increase risk,” he said. “The malting versus feed barley spread increased in 2023 and 2024 but recently fell back, as feed demand is strong.”

The bank expects global prices to find a bottom around current levels due to low barley stock-to-use ratios – with the malting-feed spread likely to drift sideways as beer and whiskey demand remains weak in the short term.

Mr Pistoia said global barley production in 2024/25 is forecast to come in at the lowest level since 2018/19.

“Globally, yields are below 2022/23 levels but above the long-term average,” he said. “And barley area has been declining as wheat, corn, and soy area increased.”

Mr Pistoia said barley ending stocks have fallen quite significantly and the market is becoming tight.

“International production volume, which was expected to rebound after a poor 2023/24 season, has gradually been downgraded, and expectations were reversed,” he said. “Farmers have been switching to the cultivation of other crops as barley prices soften. And yield forecasts have stabilised as the weather in Canada – a key barley producer and exporter – improved slightly.”

Additionally, Mr Pistoia said, “strong beer demand did not materialise” – despite events like UEFA’s (Union of European Football Associations) Euro 2024 and the Olympics – as the early summer weather was poor in the northern hemisphere, but demand did see a small recovery.

Australian harvest

After three strong barley harvests, Mr Pistoia said, Australia saw a smaller harvest in 2023/24 as El Niño – albeit weak – brought drier weather to key growing regions.

“Even though a weak El Niño led to upgrades in barley production forecasts throughout 2023/24, inventories have fallen to the lowest level since 2015/16,” he said. “Total barley exports in 2023/24 finished at 7.91 million tonnes by the end of September: 830,000 million tonne or 11.7 per cent higher, season-on-season, as China lifted import tariffs.”
 

Rabobank Australia & New Zealand Group is a part of the international Rabobank Group, the world’s leading specialist in food and agribusiness banking. Rabobank has more than 125 years’ experience providing customised banking and finance solutions to businesses involved in all aspects of food and agribusiness. Rabobank is structured as a cooperative and operates in 38 countries, servicing the needs of more than nine million clients worldwide through a network of more than 1000 offices and branches. Rabobank Australia & New Zealand Group is one of Australasia’s leading agricultural lenders and a significant provider of business and corporate banking and financial services to the region’s food and agribusiness sector. The bank has 87 branches throughout Australia and New Zealand.