According to August data of International Grains Council (IGC), world barley production, which was 139 million tons in 2018/19 season, reached 156 million tons in 2019/20 season and 159 million tons in 2020/21 season. However, there is a significant decrease in production expectations in the current season. According to IGC data, global barley production will decrease by approximately 10 million tons down to 148 million tons in 2021/22 season. Because of this decline in production, it is estimated that the ending stocks will decrease by about 5 million tons.
By Bahadır Büyükkılıç
Barley attracts attention as a highly nutritious grain product that is mainly used in animal nutrition and malting industry. According to the data of the International Grains Council (IGC), 7.4 million tons of world barley production, which was 159 million tons in the 2020/21 season, was used in the food industry, 109 million tons in feed production, 30.7 million tons in industrial areas and 10.6 million tons in other areas. In other words, about 69 percent of the world’s barley production was used as animal feed or feed ingredients. The use of barley as a feed grain is increasing, especially in locations that are not suitable for corn production. However, the production rate of barley and the resulting market price are the most important factors affecting the usage rate of this grain as feed. Feed producers or animal breeders may find it more appropriate to turn to alternative sources if barley prices exceed the prices of other grains. For example, the expectation that there will be a decrease of more than 10 million tons in production in the 2021/22 season indicates that the use of feed will also decline.
CURRENT PRODUCTION DATA
AND 2021/22 OUTLOOK
Reports by international organizations providing information on the grain situation in the world indicate that there will be a significant decrease in barley production in the current season. For example; according to August 2021 data of International Grains Council (IGC), world barley production, which was 139.6 million tons in 2018/19 season, reached 156.9 million tons in 2019/20 season and 159.1 million tons in 2020/21 season. However, it is noteworthy that there has been a significant decrease in barley production in the current 2021/22 season. The IGC data indicate that global barley production will decrease by approximately 10 million tons to 148 million tons. Drought in many regions around the world is thought to have an important impact in this decline.
Likewise, the August report of the US Department of Agriculture’s Foreign Agricultural Service (USDA) confirms the decline in barley production. Announcing a global barley production amount of 157.8 million tons for the 2019/20 season and 160.2 million tons for the 2020/21 season, the USDA forecasts 149.4 million tons for the current 2021/22 season. Leaving aside the very minimal difference between the IGC and USDA reports, it is seen that the expectation of decline and the amount of decline overlap.
In world barley production, the European Union (EU) ranks first with 55.2 million tons in the 2019/20 season. It is estimated that the EU produced 55.4 million tons in the 2020/21 season. It is predicted that this amount will decrease to 54.4 million tons in 2021/22 season.
Russia follows the EU with 19.9 million tons in 2019/20 season.
It is estimated that Russia, one of the world’s major grain producers and exporters, produced 20.6 million tons of barley in the 2020/21 season. However, there is a decrease in production expectations for the 2021/22 season. According to the USDA report, the country’s barley production will decrease to 19 million tons in the current season. This means a decrease about 1.6 million tons.
Canada is the third largest barley producer in the world in the 2019/20 season with 10.3 million tons. Competing with Australia for the third place, Canada is estimated to produce 10.7 million tons of barley in the 2020/21 season. A decrease of approximately 2 million tons (to 8.8 million tons) stands out in the production expectations for the 2021/22 season.
In the 2020/21 season ranking, Canada is followed by Australia with 10.1 million tons, Ukraine with 9.5 million tons, the USA with 8 million tons, Turkey with 7.9 million tons, Argentina with 3.8 million tons, and Iran with 3.6 million tons. In the forecasts for the 2021/22 season, the expectation of a decrease in production in all countries except Ukraine stands out. Unlike many other competitors in the world, Ukraine is expected to increase its production by approximately 2 million tons in the current season.
RATIO OF PRODUCTION
TO CONSUMPTION
According to the IGC data, world barley consumption, which was 141.5 million tons in 2018/19 season, was approximately 2 million tons higher than 139.6 million tons of production. This caused a slight decrease in stocks in the 2018/19 season.
Global barley consumption reached 152.8 million tons first and then reached 157.7 million tons in the following seasons (2019/20 & 2020/21). However, in these two seasons, thanks to the significant increase in production, consumption remained below the amount of re-production.
Forecasts for the 2021/22 season point to a decrease in both production and consumption. However, the expectation of a decrease in production (10.7 million tons) is much higher than the expectation of a decrease in consumption (5.4 million tons). This means that approximately 5 million tons of stocks will be used in the current season. The USDA data also supports the IGC data with 1-2 million tons differences.
When we look at barley consumption in the world on a national basis, it is seen that countries such as the EU, Russia, Canada, Turkey, Australia, Iran, and Ukraine are among the top 10 countries in consumption as well as in production. Apart from these countries; China, Saudi Arabia, and the United Kingdom are among the countries that have a remarkable share in consumption.
According to the USDA estimations, in the 2020/21 season, the EU consumed 49.5 million tons, Russia 14.6 million tons, China 11 million tons, Saudi Arabia 7.4 million tons, Canada 7.2 million tons and Turkey 8.9 million tons of barley. It is estimated that almost all of these countries will consume similar rates (with some decline) in the 2021/22 season.
HIGHLIGHTS IN WORLD BARLEY TRADE
According to the IGC data, world barley trade, which was 24.5 million tons in 2018/19 season, reached 27.1 million tons in 2019/20 season. The IGC estimates that the trade reached 34.5 million tons in the 2020/21 season. In the forecast of 2021/22, it is predicted that the amount of barley subject to world trade will decrease to 32.2 million tons with a decrease of 2.3 million tons.
The USDA’s August 2021 report, on the other hand, supports the IGC data with minor differences at the point of trade. According to the USDA data, world barley trade, which was around 27.1 million tons in 2018/19 season, amounted to 29.3 million tons in 2019/20 season and 33.9 million tons in 2020/21 season. The USDA predicts that the amount of barley that will be subject to world trade will be around 33 million tons in the forecast for 2021/22.
The ranking of prominent countries in international barley trade has not changed much in the last few seasons. The EU, Australia, Ukraine, Russia, Argentina and Canada take the lead in exports. The EU, which is estimated to have exported 7 million tons in the 2020/21 season, is expected to export around 7 million tons again in the current season. In the same period, it is predicted that Australia will export 6.4 million tons, Ukraine 5.8 million tons, Russia 5 million tons, Argentina 3.5 million tons and Canada 2.7 million tons of barley.
On the imports side, China, Saudi Arabia, Iran, the EU, Japan, Thailand, Turkey, Jordan, Algeria and Brazil are among the top 10. The estimated imports of these countries in the 2021/22 season are as follows: China 9.6 million tons, Saudi Arabia 7.5 million tons, Iran 2 million tons, EU 1.3 million tons, Japan 1.2 million tons, Thailand 1.1 million tons, Turkey 1 million tons, Jordan 800 thousand tons, Algeria 700 thousand tons, and Brazil 700 thousand tons.
THE COURSE OF BARLEY PRICES IN THE WORLD
The decline in barley production in the world and strong expectations that this decline will continue are putting upward pressure on barley prices. The only factor balancing the prices is the global recession in the demand for barley. Due to the decrease in barley production and already high feed prices, it is estimated that the use of barley as feed will decrease in the 2021/22 season. In the coming days, feed producers will need to turn to lower-priced grain raw materials.
References:
• International Grains Council (IGC), Supply & Demand, GMR 524 – 26 August 2021, https://www.igc.int/
• United States Department of Agriculture Foreign Agricultural Service (USDA), Grain: World Markets and Trade Report, August, 2021, https://www.fas.usda.gov/
