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ANALYSIS: The global barley market faces a significant shift as China reduces imports

November 21, 2024

Written by Gabriel Antonio, Barley Analyst (Data & Analytics Team), Strategie Grains by Expana

The global barley market is undergoing a major transformation as China, traditionally one of the largest importers, drastically reduces its purchases. Strategie Grains by Expana predicts that China’s barley imports will fall by 35-40% this campaign to approximately 9.7 million tonnes, a sharp decline from last year’s record levels. While some forecasts suggest an even steeper drop, the current estimate reflects barley’s continued competitiveness compared to other feed grains like corn and wheat.

China’s reduced demand compared to the previous campaign stems from several factors. First, corn prices are expected to become more attractive due to record high global supplies, making barley less competitive. Additionally, China’s domestic harvests of corn and wheat reached record levels of 252 Mt and 115 Mt, respectively, significantly reducing the country’s reliance on imported barley for feed. Another factor is China’s high carry-in barley stocks, estimated at 2.3 Mt, which are well above the five-year average. Furthermore, challenges in China’s livestock sector, including low pig sector profitability and government efforts to reduce swine production capacity, are expected to dampen barley consumption.

Despite these projections, early data from the 2024/25 campaign shows a robust pace of Chinese barley imports, outpacing the same period last year. This surge reflects the normalization of trade flows from two key suppliers: Ukraine and Australia. Ukrainian barley shipments, disrupted last year by the Russia-Ukraine conflict, resumed earlier this campaign. Similarly, Australian barley exports have picked up following the lifting of a trade ban in August 2023. However, these early trends may not reflect sustained demand, emphasizing that the pace of Australian barley imports into China will be a key indicator in assessing actual demand.

China’s reduced role in the barley market will have varying impacts on global exporters. Australian exporters are expected to navigate the shift more effectively, benefiting from strong demand in Asia and the Middle East. In contrast, French exporters, whose barley is less competitive outside China, may face greater challenges. Argentine exporters could see pressure to find alternative markets in South America and the Middle East, while Canadian exporters, heavily reliant on China, may also struggle to diversify.

Global barley trade is expected to be low and drop to 27-28 Mt this campaign, down from 34 Mt last year. While the decline in Chinese imports is a significant driver, strong demand from other regions, such as the Middle East and Turkey, is likely to offset some of the losses. The Middle East, experiencing an economic recovery, is projected to import more barley, while Turkey is expected to increase imports to compensate for a smaller domestic crop, although its high carry-in stocks may moderate this demand.

Tight global barley supplies, with production slightly lower than last year at 142 Mt and carry-out stocks forecasted to fall to 19.2 Mt, are expected to push prices higher. While reduced Chinese demand may ease pressure, steady consumption in the EU, the Middle East, and Turkey will keep global demand strong. Russia and Ukraine are anticipated to remain the most competitive origins for barley this campaign, with French exports gaining traction later as stocks from these suppliers dwindle.

As the barley market adjusts to this shift, reducing Chinese imports highlights the need for exporters to adapt to a more competitive global landscape. The interplay between constrained supply and resilient demand from other regions will shape the market’s trajectory in the months ahead.