Wednesday, November 24, 2010

Western Australian Malt Barley Premiums Plummet

It was an interesting week last week for the Western Australian malt barley trade! Despite the WA barley harvest finishing up and malt recievals only at approximately 30%, combined with a major exporter rumored to have booked 300,000mt in export commitments. Prices fell from $353/mt (that was offered on 12th Nov) to $301/mt FIS Kwinana being offered last Friday (19th Nov). During the same time east coast malt bids remained stable ($280/mt Geelong). Basically WA prices were slipping back to export parity.

So what happened!!

A rumor doing the rounds last week was that due to the high cost of WA malt barley, Joe White has decided to reduce processing throughput at its Forrestfield malting plant to concentrate on running its eastern states plants at higher capacity. When Viterra dropped its price by $35/mt last Wednesday (17th Nov), other traders soon followed.

However today Graincorp has entered the market today lifting the marketing by $20/mt to $320/mt Kwinana zone. Maybe Graincorp has re-entered the market as they could be getting worried about another large weather front that is forecast to dump up to 25 – 50mm of rain just when the barley harvest is starting to get into full swing after a relatively cool damp spring. This will further worry east coast maltsters who are getting increasingly concerned that the malt barley harvest window is quickly diminishing, with all that will be left standing in the paddocks will be weather damaged barley!

If you miss out on these prices, don’t panic! Harvest pressure should start to ease and there is a fair chance that export parity will rise after our harvest. Especially as we are hearing of the increasingly tight supply situation in Europe and Canada and with traditional malt exporter Ukraine facing export constraints, it may not be too long until prices rally again internationally.

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