Australian grain prices fell sharply last week as Chinese trade tensions build, jeopardising critical barley and beef markets.
Wheat and barley values fell heavily after China's Ministry of Commerce flagged a possible 80 per cent tariff on Australian barley imports.
China also targeted the Australian beef industry after suspending imports from four large processing plants in Queensland and northern NSW for "labelling inconsistencies". The four abattoirs represent 35pc of Australia's beef exports to China.
Chinese officials have said the barley and beef trade censures are unrelated. Many see it as a rebuke from Beijing for Australia's calls for an inquiry into the origins of the COVID-19 pandemic, which has killed more than 300,000 people around the world and crippled most economies.
Old crop wheat and barley bids plunged $10 to $40 lower after the announcement of the barley import tariffs. New crop prices were off by $15 to $30 a tonne. The largest price declines were seen in the major export states of WA, SA and Victoria.
Declines in barley prices into the Darling Downs were modest. Feedlot demand for barley is expected to remain strong as buyers compete for the limited production in Queensland and northern NSW.
Falling prices are expected to create a surge in demand by the livestock industry as buyers incorporate more barley in rations at the expense of wheat, which is $50 to $60 more expensive.
US wheat futures were sold lower last week on forecasts of a sharp increase in global stocks. The USDA foreshadowed a 15 million tonne increase in world wheat stocks to a record large 310mt.
However, major exporter wheat stocks are expected to remain tight, but buyers are paying close attention to dry weather in Europe and parts of the United States. Analysts are saying that dry weather in the coming weeks would result in additional yield losses.
It's only a week out from June and Queensland farmers are becoming more anxious for rain to get cereal crops planted. Near term forecasts are more encouraging with an improved chance of rain later this week.
Extended forecasts remain broadly favourable. The Bureau of Meteorology is forecasting a wetter than normal June-Sept across all of Australia's cropping areas. This is all good but farmers in Queensland, northern NSW and WA are looking for rain now.
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