There is little hope for a revival in barley prices, grain handler AWB has said, even after America forecast that its plantings would fall to a record low this year, fuelling expectations of a fall in world production.

The Australian group, cutting its forecast for farmers' returns from its first feed barley pool by Aus$7 a tonne, said that the grain's prospects were "not positive" thanks to a number of headwinds.

While several of these were domestic in scope, with the strong Australian dollar which was undermining export competitiveness, AWB also flagged the "more than adequate global supplies" were also behind a drop of Aus$10 a tonne in export prices in recent weeks.

"Unfortunately, the outlook for coming months suggests that barley prices will remain under pressure, as there are simply no issues appearing in the market that would encourage prices," Mitch Morison, the AWB general manager commodities, said.

Out of favour with farmers

The comments come the day after the US, a mid-ranking barley producer, forecast that its sowings of the grain for this year's harvest were on track to fall by 8% to 3.27m acres, led by a 19% slump in North Dakota, the grain's biggest champion in America.

If realised, this will be the lowest barley planted acreage on record, well below the previous record low of 3.45m acres established in 2006," the US Department of Agriculture said.

Production in Australia and Canada is also expected to decline, as well as in Europe, the world's biggest producer, which is dropping intervention support as of next season.

The Canadian Wheat Board last week estimating that world barley production would fall by 3.9% this year, implying a reduction approaching 6m tonnes.

Robust inventories

However, supplies remain underpinned by surpluses left over from two years of strong harvests.

World stocks will end 2009-10 at more than 32m tonnes, up 63% in two years, according to US Department of Agriculture estimates.

America's own inventories started last month at 3.43m tonnes (157m bushels), 22% higher than a year before, USDA data on Wednesday showed.

 

Agrimoney.com