Miller Magazine Issue: 130 October 2020

61 COVER STORY MILLER / OCtOber 2020 which are in the rise since mid-August: RUSSIA: PRODUCTION AND EXPORTS Again, due to abnormally high yields in the Central and Volga regions of Russia, a bumper barley crop is expect- ed there as well. As of September 24, barley harvest in Russia was 92.6% complete, producing 21.4 MMT (bun- ker weight) and at a yield of 2.71 MT/ha (up 6% on the year); UkrAgroConsult’s estimate equals 20.5 MMT, though some market estimates reach 21 MMT. We fore- cast Russian barley exports in MY 2020/21 at 5.2 MMT. The key buyer in recent years is Saudi Arabia, which already managed to step up purchases by 35% in July 2020 versus the same month in 2019. UKRAINE: PRODUCTION AND EXPORTS UkrAgroConsult estimates Ukraine's barley crop at 7.9 MMT (less than last year because of drought). We esti- mate exports at 4.25 MMT. it is already possible to com- pare the results of the first two months with last year’s ones. Like a year ago, the bulk of Ukrainian barley is shipped to China. This season the volume is 77% higher, and China’s share in Ukrainian barley exports expanded from 35% to 60%. In the first two months, the export share of the second biggest importer – Saudi Arabia – dwindled to 15% from 19%. At the same time, demand from the EU plummeted (89% on the year) and the export share slumped from 21% to 3%. Judging by the updated estimates, the EU harvested a larger barley crop than last year and continues increasing its presence in Saudi Arabia and China, which are major export markets for Black Sea countries. In MY 2019/20, the EU replaced Ukraine in the leading position in the market of Saudi Arabia. In July-August 2020/21: - the EU already supplied 442 KMT of barley to Saudi Arabia (+18% on the year). - Ukraine – 334 KMT (-14% on the year), - Russia – 771 KMT, or 80% more than in July-August 2019 (according to port data). Overall, the USDA estimates demand from the main buyer – Saudi Arabia – at last season’s level (7.5 MMT), and the exporters try to supply as much as possible be- fore Australia’s new crop arrives in the market (+1.5 MMT from MY 2019/20). In addition, the EU continues stepping up exports to China (648.7 KMT has already been shipped to the coun- try, or up 45%), but Ukraine retains the leading position with 1.3 MMT exported to the Chinese market in Ju- ly-August. The USDA expects China’s barley demand in MY 2020/21 to be down year-on-year at 5 MMT (-300 KMT from MY 2019/20). Moreover, the EU and Black Sea countries will soon face competition there from Canada, which has already harvested some 35% of its new crop and was a strong player in this market in MY 2019/20: UkrAgroConsult predicts Australian barley shipments to Saudi Arabia to fully restore in MY 2020/21 for a few reasons: 1. the import duty imposed by China restricts access of Australian barley to the Chinese market, i.e. Austra- lian exporters need to increase their presence in other markets. In MY 2016/17 (July-June), Australia exported 794 KMT of barley to Saudi Arabia owing to a large crop; 2. Australian export price for November-December is set at the current level of Black Sea price in view of sharply increased production: 3. freight from Australia is also cheaper than from the Black Sea region (now USD 22-23/MT vs. USD 28-29/ MT, respectively); For Ukraine, whose exportable supplies dwindled, los- ing the market of Saudi Arabia will not be that notice- able, because Ukrainian barley is still consumed mostly by China. This will to a greater degree affect deliveries