CBH Group shifts barley focus to South America

Australia’s biggest grain exporter is eyeing Chile, Ecuador, Colombia and Brazil as new markets for WA malt barley as it focuses its efforts away from China. CBH Group made history when Australia’s first malt barley shipment to Mexico set sail from Albany Port on January 17. The bulk purchase was hailed as a breakthrough in market diversification by CBH after trade tensions with China led the Asian superpower to ban barley from the co-operative in August — just three months after slapping a trade-ending 80.5 per cent tariffs on all Australian barley imports. The 35,000 tonnes of WA malt barley sold to Heineken was likely to be made into Sol, Dos Equis and Tecate beer for distribution across the Central American powerhouse. CBH chief marketing and trading officer Jason Craig this week revealed a second shipment would set sail for Mexico in the coming months. He said malt houses and breweries in South America were showing increasing interest in WA grain after previously buying from Canada and Europe — a trade realignment Mr Craig said was brought on by China’s tariffs on Aussie barley and meant Canada and Europe were now selling more malt barley into China. “We are seeing real strength in grain demand from across the world,” Mr Craig said, labelling the increasing demand for WA grain a “mini commodity boom”. One of the major countries CBH is targeting for feed barley is Saudi Arabia, which has rapidly transformed into WA’s biggest barley market. Saudi Arabia is expected to buy two million tonnes of Australian barley this year, up from nearly nothing in 2019-20. Australia was the big winner in Saudi Arabia’s latest barley tender, which included 600,000 from Australian exporters CBH and Viterra in April and May. Of that, two shipments of 60,000 tonnes was ordered from CBH — fetching $366.90 a tonne and $373.70 a tonne delivered into Saudi Arabia. Meanwhile, 280,000 tonnes was ordered from Viterra. Mr Craig said 500,000 tonnes of WA barley had been exported in January, predominantly to Saudi Arabia, Vietnam and Thailand. “Demand is quite strong. While the premium is not really there at this moment, it is great we can find other alternative markets,” he said. “We have seen business into Vietnam, Thailand, and the largest market, which has been Saudi.” However, Mr Craig said WA grain growers were seeing competition from Russia in Saudi Arabia — its biggest barley supplier — which would cap prices for now. CBH’s ability to prove its barley was sustainable was starting to prick up the ears of large-scale maltsters and brew houses, Mr Craig said. “WA is very sustainable and that interest has really come into the fore this year. We are starting to access opportunities with some of the bigger companies,” he said. Rising freight rates because of the price of oil and tightening supply of vessels have also played into WA grain growers’ hands. In other markets, Mr Craig said a doubling of freight rates from $US1200 to $US25,000 a day added a “significant increase” but improved CBH’s competitiveness into South-East Asia.