Barley: Supply Concern may leads to Active Buying & Record Imports

Posted on 26th February 2021 by Mr. Ram Gopal Yadav, Head of Market Research & Price Intelligence Department - NBHC

Barley, rabi (winter) crop is a small scale crop and is primarily a cereal grain popularly known as "Jau" in India. India grows 0.65-0.8 million hectares per annum of barley each year which produces around 1.5-1.8 million tonnes, with approximately 80 per cent used for feed and 20pc for the food market, including malting and brewing. In India, Rajasthan (50%), Uttar Pradesh (22%), Madhya Pradesh (15%), Haryana and Himachal Pradesh are the major producers of barley.

Barley is grown on around 70 million hectares of land across the world, with a global production of 160 million tonnes. European Union is leading producer of barley, followed by Asia. The major barley producing countries are Russia, China, Canada, Spain, France, Australia, Ukraine, USA , UK and India. The Winnipeg Commodity Exchange (Canada) and Sofia Commodity exchange (Bulgaria) are the most prominent exchanges for Barley trade wherein trading unit is in MT (metric ton).

India has a malting capacity of about 4.5-5.0 Lakh tonne per annum; On average, malt and other beverage industries in India require 5-6 lakh tonnes of barley. Barley is converted into malt to use for various food preparations, supplements and flavoured drinks like Horlicks, Bournvita and Boost. Malt barley is the main ingredient in beer. To produce one liter of beer, 200 grams of malt is needed. Multinational brewers including Asahi, ABInBev, Carlsberg and Heineken hold more than 90pc of India's beer market.

India imports 2 lakh tonnes barley from Argentina and France with potential for Black Sea trade.  Argentinian FAQ barley is currently supplying most of India's import requirement, which kicks in after the domestic crop typically harvested in March and April is exhausted. Some Russian barley, as well as Esterel and RGT Planet barley from France, has also been imported by Indian maltsters. Kenya and Ukraine are also shaping up as suppliers.

In international market, Argentine barley exports to China smash records 1 million tonnes in 2021 amid Australia spat. The International Barley prices had been supported lately with increased demand for animal feed. However, prices may now have curtailed some demand as wheat falls, particularly with large supplies expected next season.

Currently, International market is on high side, the imported barley's Jaipur delivered prices are at Rs.21-22 per kg and imports are unviable with a disparity of around Rs.7.5 per kg

Aggressive Local Purchase: Due to higher prices in International market and lower upcoming crop, malt buyers are expected to prefer maximum buying in local. Currently, local prices are hovering at Rs. 14 - 15 per kg. Loose Mandi prices are at Rs.13.5-13.8 per Kg. Import are likely in the month of July- August (Q3 - 21) with a preferred imported price of Rs. 18

Barley prices drop as COVID hits feed and beer sales drastically in 2020

India's Barley Supply & Demand

  • Lowest Carry-in stocks in last 5 years
  • Lowest area in last five year, higher loss reported in Sri Ganga Nagar and Hanumangarh Belt, Farmer's shift toward mustard on comparative better returns. In Alwar & Churu belt, marginal lower area reported.
  • India may to import record Barley around 2.5 MMT
  • Keeping record import and previous year consumption, ending stock would be record low, less than 2 MMT, lowest in last eight years. In 2012-13, lowest carry forward of 1.17 MMT reported.
  • Due to relative higher prices, feed buyer would shift to other alternatives.

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