Agribusiness & Food

Value slump to soften Australian coarse grain production boom

Grain. Photo: Shutterstock.

A 20% rise in the volume of coarse grain exports in the 2016/17 financial year will not be matched by value gains, as commodity prices are predicted to drop significantly, the Australian Bureau of Agricultural and Resource Economics and Sciences has said.

A pair of analysts from ABARES, Kyann Zhang and David Mobsby, recently forecast Australian coarse grain exports to rise to 8.2 million tonnes (mt) in the current financial year, driven primarily by higher production of barley and oats.

“The value of coarse grain exports is forecast to be largely unchanged at $2.3 billion,” the analysts reported, however, “reflecting lower world prices offsetting increased shipments of Australian coarse grains.”

ABARES is forecasting the world corn indicator price to average just US$150 a tonne in 2016/17, 11% lower than in 2015/16, and the world indicator price for barley to average US$152 per tonne, down 12%.

While global demand for coarse grains is forecast to rise, a large volume of carry-over stocks and continued strong production are expected to result in the lower world prices.

The bulk of Australia’s coarse grain export figure is barley.

Barley exports are forecast to rise by 26% in 2016/17 to 6.9mt, supported by above average production estimated for 2015/16, and forecast for 2016/17.

“Forecast exports are expected to be partially offset by higher domestic feed grain use and recent policy changes in China favouring the consumption of domestic corn over imported barley and grain sorghum,” the ABARES writers explained.

Despite the 26% forecast rise in export volume for barley, the value of Australian barley exports is figured to rise by just 7%, to $1.9bn.

Unlike barley, exports of the smaller major component of Australia’s coarse grains figure, grain sorghum, are forecast to fall markedly in 2016/17, from the very high volumes shipped during recent years.

“This largely reflects lower import demand for grain sorghum from China,” the pair wrote. “The value of Australian grain sorghum exports is forecast to almost halve to $186m.”

 

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