China is the prospective but risky sales market for Ukrainian barley — APK-Inform

Source

APK-Inform

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In the beginning of 2019/20 MY, the number of companies planning to supply to grains to China significantly increased among participants of the Ukrainian grain market, because the reporting destination is considered as the prospective market for barley selling. At the same time, there are certain risk factors, which the market destination usually has.

According to the July report of the USDA, in 2019/20 MY the general barley imports to China can reach 7 mln tonnes and come up with the purchasing volumes of corn (7 mln tonnes). At the same time, the forecast of barley imports demonstrated the upward trend of 1 mln tonnes compared with the previous season, while the corn segment is expected to increase the imports by 2 mln tonnes compared with last year, even despite the overestimation of grain carry-over stocks in the country.

The trend is confirmed by one of the risk factors — changing of the raw material structure in the forage production (using of corn instead of barley). The reporting trend can even reach the global feature, which will lead to decreasing of the demand for barley, for example, in Saudi Arabia. Moreover, the demand for barley from China can become unstable, in terms of rather difficult situation with the outbreaks of African swine fever (ASF) in the country, said APK-Inform analyst, Andrei Kupchenko.

According to him, there are certain risks, caused by the competition rates in the supply of barley on the Chinese market.

As of the countries-suppliers of corn to China, in 2018 Ukraine took the leading positions, while in the supply of barley — the fourth one only. According to the International Trade Center, Australia is the leader in the exports of barley to China, which covered 66% of the grain supplies to the country for 3 recent years. Canada is another key supplier of the grain, and took the second position, but significantly behind the leader — 18% only. As for Ukraine, for 3 recent years the figures totaled nearly 7%. At the same time, in 2018 the average price of barley supplied from Ukraine to China totaled 241 USD/t, which was almost at the level of the Australian grain — 244 USD/t, explained A.Kupchenko.

According to him, in terms of the expected growth of barley production in Australia, the Ukrainian grain can become non-competitive. In addition, Russia can also start supplying barley to China, which will create additional competition.

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