Christina Serebriakova
CEO | ASAP Agri

The prospects of Ukrainian barley export in 2024/25 MY may seem quite gloomy from the point of view of potential buyers’ demand, as such key destinations like Spain and China may reduce purchases. Also, the supply of Ukrainian barley will definitely decrease in the current season. Under the optimistic scenario, the export may fall 10-12% y/y. At the same time, the competition from main exporters may ease as well, as export prospects from Australia and Russia are currently seen below last season’s levels, while the forecast for Canada and Argentina are steady y/y. 

Results of export in 2023/24 MY: Losses in Turkey, gains in China

Inna
Stepanenko

According to ASAP Agri data, Ukraine exported 2.5 MMT of barley in 2023/24 MY, down 11% from 2.7 MMT in 2022/23 MY. The EU remained the key destination with 1.1 MMT of barley imported from Ukraine. However, the volumes decreased by 15% from 1.3 MMT in the previous season. The decline was based on the overall reduction of barely import to the EU in 2023/24 MY. According to the European Commission, in Jul-May 2023/24 MY, the EU imported 1.77 MMT of barley, down from 1.9 MMT over the same period year ago (-7% y/y).  

Export of Ukrainian barley to Turkey collapsed in 2023/24 MY to only 36 KMT, down 95% y/y. The country harvested 8 MMT of barley in 2023/24 MY, according to the USDA, up 8% y/y, and its carry-in stocks surged 3 times to 922 KMT. Thus, barley import to Turkey shrank in 2023/24 MY to only 142 KMT, down 93% y/y.  

In turn, export of Ukrainian barley to China doubled from 342 KMT in 2022/23 MY to 702 KMT in 2023/24 MY, as the importer increased overall barley purchases by 69% y/y to 14.5 MMT, as per the USDA.

As to the other destinations, there was higher shipments to the most of Middle East and North Africa countries, except Lebanon and Libya. Particularly, Tunisia increased purchases to 137 KMT from 84 KMT year ago. Saudi Arabia imported 132 KMT, while there were no supplies of Ukrainian barley in the country in 2022/23 MY. Israel doubled purchase to 113 KMT.

Data shows better-than-expected Ukrainian barley yield, but 2024 crop still record low

Initially, most local forecasters expected Ukrainian barley crop 2024 to fall by about 1 MMT y/y to 4.9 MMT (AgMin), while July USDA was more optimistic at 5 MMT. Herewith, data from the fields show much better yield than was expected, which could a bit improve the estimate of the crop size in August forecasts of leading analysts, including ASAP Agri. Anyway, in general Ukrainian barley harvest 2024 will be most of all record low. 

Harvesting of new-crop barley started in Ukraine in the middle of June, about one week earlier than last year and was advancing fast. As of 01 Aug, farmers harvested barley from 1.3 MLN HA or 93% of the area forecasted by the State statistics service of Ukraine (1.39 MLN HA). Year ago, harvesting campaign as of the same date was done on 940 KHA. So far this year 4.8 MMT were collected. By the reported date, the average yield of barley decreased a bit from the numbers, which we saw in the middle of harvesting campaign and amounted to 3.72 MT/HA, which is anyway lower vs. 4.00 MT/HA from the same acreage year ago. July WASDE was implementing 3.51 MT/HA yield, but as well it put higher acreage vs. official figures in Ukraine. As a result, the share of Ukraine in the global barley production could decrease in 2024/25 MY to 3% from 4% in the previous season, according the USDA.

Ukrainian barley export-24/25 could be at a 13-year low 

July WASDE saw the Ukrainian barley export potential 2024/25 at 2.2 MMT followed drop in production. Even in case experts will increase their vision in the nearest months by some 0.2 MMT – it will be still at a 13-year low.

Ukrainian barley export 2024/25 started faster than previous year. Country shipped 580 KMT of barley as of 31 July 2024. It is almost twice more than same time last year, when the corridor was not working due to Russia. About half of the July 2024 volume went to China, while same time last year shipment to China were absent. Also, about 100 KMT went to Spain, almost same like previous year. The third biggest importer in July became Libya.  

In spite of lower crop, the share of Ukraine in the world export could remain at 8% in 2024/25 MY, according to the USDA, as there will be notable decrease of shares of Australia (due to lower beginning stocks) and Russia (on lower crop). 

Competition and destinations: Prospects of 2024/25 MY

The main question is where to find the demand for Ukrainian barley in the current season. The prospects seem quite gloomy if we have a look at the forecast of barley import to the key Ukrainian buyers. 

According to the USDA, the EU will cut its demand for barley by 30% y/y in 2024/25 MY to 1.3 MMT, as the harvest is seen rising 11% y/y to 52.8 MMT. Particularly Spain, the key EU importers of Ukrainian barley, is going to harvest 8.4 MMT of this grain, more than 2 times higher y/y, as per the European Commission. The volume will be 10% above the 5-year average. That will substantially reduce the demand from Spain. 

At the same time, the crop in the main EU barley exporting countries may turn lower than the current expectations. Wet weather in France and Germany was delaying harvesting process and the yield of winter barley was lower y/y. In Germany, situation seems not so bad, and some agencies even forecast same crop as last year. But for France the EU Commission sees 1 MMT crop decline y/y to 11.2 MMT. As of 02 August, France almost completed winter barley harvesting, as well 54% of spring barley was harvested, well slower than 94% last year. Thus, the key EU producers might have less barley for sale in 2024/25 MY that will reduce competition from the EU as exporting origin, and will push European importers to look for barley outside the bloc. So far, the USDA projects EU 2024/25 barley export at 7 MMT (+4% y/y). The figures from the EU Commission is much higher, with export to the third countries is seen at 10.3 MMT in the current season (+8% y/y).  

For China, the current USDA forecast of barley import in 2024/25 MY is at 10.2 MMT, down 30% y/y. After the strong import in 2023/24 MY, the country accumulated high carry-in stocks that raised 8 times to 1.6 MMT in 2024/25 MY. Also, the feed consumption is expected to decrease y/y. At the same time, TOP supplier-23/24 of barley to China – Australia will have higher y/y crop and could partially compensate the 1 MMT decrease in crop in France, which was the 2nd largest supplier of barley to China in 2023/24 MY. Ukraine in general has some chances to increase barley export to China, but competition could be still tough. 

To come back to figures, Australia is on course to harvest bigger barley crop in 2024/25 MY vs the last year. Some concerns over the crop in Western Australia state were eased after the beneficial rains fell in Jun. The weather is expected to remain favorable. The USDA sees Australia’s 2024/25 barley crop at 11.5 MMT, up 6% y/y. However, the export potential of Australian barley is seen substantially lower y/y – at 5.6 MMT, down 19% (due to lower beginning stocks). As a reminder, Australian exports of barley to China have boomed after tariffs were lifted in August 2023.

Argentina and Canada, who are 3rd and 4th biggest exporters of barley to China in 2024/25 will have lower y/y barley crops.  In Argentina, crop is expected to decrease by 0.4 MMT y/y to 4.7 MMT, while export could decrease only by 0.1 MMT y/y to 3.3 MMT. In Canada, only slight reduction of barley crop is expected so far. The USDA pegged the crop at 8.6 MMT, down 3% y/y. Currently, the condition of Canadian barley is quite good, with only some concerns in Saskatchewan province where the lack of rains is observed across some areas. The USDA sees Canadian barley export in 2024/25 MY at 2.3 MMT, steady y/y.

Turkey will increase barley import in 2024/25 MY only to 400 KMT. It is 182% higher than in the previous season, but 81% less than in 2022/23 MY. Barley crop in the country is seen at 7.1 MMT in 2024/25 MY, down 11% y/y, but the carry-in stocks are high at 1.7 MMT, up 89% y/y.

As for other destinations, some sizable growth in demand is expected for Saudi Arabia, where the import may increase by 1 MMT y/y to 3 MMT. Herewith, at the end of July, SovEcon raised its forecast of Russian barley crop 2024 by 0.7 MMT to 19.3 MMT (amid relatively high yield of winter barley in the southern regions and favorable weather in the Volga region), which is about 1 MMT higher than July WASDE. Thus, chances to increase Ukrainian barley export to Saudi Arabia stay low, however, the effect of hot and dry weather on spring barley in Russia yet to be assessed. So far, the USDA expects Russia to export 4 MMT of barley in 2024/25 MY, down 3.5% y/y.

Fields data and CPT market heat Ukrainian barley prices during harvesting

Daria
Marchenko

“In Apr/May 2024 FOB POC Ukrainian barley offers were declared at the level of 180 USD/MT. But from mid-May to mid-June prices were suddenly heat by upcoming news of weather impact, namely, a lot of rains. Then, fields data showed better than expected yield and sellers decreased offers in the beginning of July to 178 USD/MT vs. Buyers’ demand at 172 USD/MT. And in the second part of July, when fields data showed decrease of yield, namely in the biggest region producer of barley in Ukraine – Odessa region, plus, CPT demand in deep sea ports jumped - sellers raised their offer ideas to about 195 USD/MT for handy and panamax size batches”, - stated Daria Marchenko, Broker at Atria Brokers. “As a flashback to the middle of June - harvesting in Romania pushed the Romanian barley prices to fall to around 185-8 USD/MT FOB Constanta, which firstly made Ukrainian origin totally uncompetitive, cause in June Ukrainian sellers were keeping at 190 USD/MT FOB POC, but with harvesting progress, prices decreased”, she underlined.

“From the internal brokerage point of view, I can summarize that we were waiting for the new crop and market activity for so long, but now the demand is still not clear. Unfortunately, we lose to support Saudi Arabia demand from the first weeks, but the Chinese buyers stabilized the situation. On destination markets such as Egypt, Libya and Lebanon activity started suddenly but confidently and final suppliers were ready to pay for Ukrainian barley, but this days our rising prices are not satisfactory for these destinations. CPT market is as always keeping prices and pushing FOB levels on high”, finalized D. Marchenko.

More insights about the trade flows of not only barley, but corn and feed wheat you can get within the Global Grain Geneva 2024 conference on 12-14 November. ASAP Agri is a Media Partner of Global Grain and will share the hot topic opinion within one of the panel discussions.