Australian barley production is forecast to lift by eight per cent to deliver 11.7 million tonnes in the 2024-25 season – while facing trade headwinds as Chinese buyers plan to focus on their domestic market – according to new research from Rabobank.
Chinese authorities have asked local traders to focus on buying domestic grains as the country’s inventories increased due to weak demand, putting Australian barley flows at risk, the agribusiness banking specialist said.
Australia has traditionally been the largest exporter of barley to China, but volumes suffered from the introduction of Chinese tariffs on Australian barley in 2020.
“While China has started to import barley from Australia again, overall import volumes are declining, as consumer confidence is under pressure,” the Barley dashboard Q1 2025 report said.
Report co-author, RaboResearch analyst Vitor Pistoia, said malting barley, which made up a significant part of Australia’s exports to China, “faces headwinds from weak (Chinese) beer consumption in recent quarters”.
Mr Pistoia said globally, demand for barley from the beer and whiskey industry softened and the price of alternative feed grains, such as corn and wheat, had fallen due to a bumper harvest in the US, pushing feed barley prices lower.
“Though the fundamentals for the barley industry remain soft, the low STU (stock-to-use) ratio is likely to provide some support at current price levels for the coming 2025-26 season,” he said.
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 were 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 expected global prices to find a bottom around current levels due to low barley STU ratios – with the malting-feed spread likely to drift sideways as beer and whiskey demand remained 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.
“Barley area has been declining as wheat, corn, and soy area increased.”
Mr Pistoia said barley ending stocks had fallen quite significantly and the market was 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.
“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 (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.
After three strong barley harvests, Mr Pistoia said Australia saw a smaller harvest in 2023-24 as El Nino – albeit weak – brought drier weather to key growing regions.
“Even though a weak El Nino 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.”
