In September, Ukraine will cut barley exports by more than half due to a reduction in Chinese purchases of the crop, according to the analytical cooperative Pusk, created within the framework of the All-Ukrainian Agrarian Council (AAC).
“The Ukrainian barley market is undergoing significant changes that affect export prospects. As of August 19, exports of this grain reached 315 thsd tonnes, but preliminary forecasts for September are worrying. The volume of contracts for August is 600 thousand tons, while only 280 thousand tons are contracted for September. This is almost half as much,” analysts said.
In their opinion, the main reason for the future decline in exports is the decrease in demand from China, which previously provided more than half of Ukraine’s barley exports.
“The Chinese factor plays a significant role here, as China used to account for 55-56% of the geographical structure of Ukrainian barley exports. China is not expected to return to the Ukrainian grain as actively, but will probably switch to Australian barley, which will be delivered in December-January. Without Chinese contracts, monthly exports of Ukrainian barley will not exceed 300 thousand tons,” the experts explained.
They pointed out that the decline in demand from China is already beginning to be felt in the domestic market. A number of traders stop accepting barley, switching to other crops such as corn.
At the same time, they point to a significant correlation between barley and wheat markets and predict that the expected rise in wheat prices will also contribute to the growth of barley prices.
“The notional barley prices are still in the range of $170-172 per ton. We can expect that the wheat market will pull up the barley market. So, by the end of August and beginning of September, there may be a certain increase in barley prices. But starting in September, barley may become a more niche crop,” Pusk summarized.
