World barley stocks to fall to 34-year low, as farmers switch crops

12.05.2017

World barley stocks will end next season at their lowest in more than 30 years, as the grain continues to fall out of favour with farmers, whose sowings of the grain are to come close a record low.

The US Department of Agriculture, in its first forecasts for 2017-18, signalled a change in course for grain supplies overall, seeing a reversal in inventories, after a five-year stockbuilding process.

But the dynamic was seen as particularly marked for barley, in which world inventories were seen closing next season at just under 17.5m tonnes.

Besides representing a 29% fall year on year, that would be lowest figure since 1983-84.

'Production is to drop significantly'

The forecast reflected in part expectations of a return to more typical yields in countries such as Australia, which enjoyed a record barley harvest in 2016-17.

However, it was in the main down to expectations of a further drop in world barley sowings, by 960,000 hectares to 47.2m hectares, the smallest but one on USDA data going back to 1960.

"World barley production is expected to drop significantly with reduced crops for Australia, Canada, Kazakhstan, and Ukraine," the USDA said.

"Australia's 2017-18 crop is expected to return to normal conditions after a record harvest the preceding year."

Sowings in the US itself were pegged at 2.5m acres, the lowest on data going back to 1910.

Price signal

The USDA did not outline the reason for its lowball barley seedings estimates.

However, it comes against a backdrop of strong competition in sowing plans with other grains, many offering the chance of higher returns.

The USDA's forecast farmgate barley values in the US falling to a seven-year low in 2017-18, if taken at the $4.85-a-bushel midpoint of the forecast price range.

This despite low inventories, which would suggest support in values.

By contrast, the USDA forecast rises in domestic farmgate prices of the likes of oats, sorghum and wheat.


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