JAIPUR (Commoditiescontrol) - A large gap in demand and supply of barley is unlikely this year even as production declined. But shortage of malt quality barley could be the main reason behind price rise post April. Production of malt quality has been hit due to untimely rains and unfavorable weather condition. Subsequently, higher production of feed quality barley is estimated. This means, availability of malt quality would be limited in markets, which would help its prices to move up amid increased demand in summer. However, prices are likely to ease in the near-term as arrival in Rajasthan and Haryana is estimated to rise. But, good quality barley will have a good time in days to come.
Expected decline in production and export in Canada is further likely to provide support to barley. This year, barley production was earlier expected to remain near to last year’s output but recent bad weather conditions are now likely to hamper the output.
Ministry of agriculture had projected production at 17.7 lakh tonnes this year compared to 18.3 lakh tonnes last year. But crop in around 2.64 lakh hectares was affected in Rajasthan due to untimely rains in March. This is around 65 per cent of the total acreage in the state.
Prior to the unseasonal rains a month back, production was estimated to increase 32 per cent in Rajasthan. The state is likely to produce around 11.55 lakh tonnes barley this year against 9.42 lakh tonnes.
Mr. Ghasiram Agrawal from Jaipur-based Gajanand Devanand Bansal told commoditiescontrol.com that barley production is expected to decline due to adverse weather conditions, so there will be shortage of malt quality stock. Around 70 per cent of production will be of feed quality barley. Only 30 per cent barley production would be of malt quality. As a result, malt manufacturers will have to import A grade barley otherwise they will have to buy B grade grain.
Mr. Agrawal adds that there will be supply pressure in the markets of Rajasthan and Haryana later this month, putting pressure on prices. But the scenario will change in the next month, he notes. Demand in barley may increase in the short-term as it is cheaper than maize and sorghum. Barley may feel the pressure in case prices of maize and sorghum are lowered, which is very unlikely. Export of barley from India at present is weak, resulting in mounting of stocks at Kandla port. Currently, feed quality barley is being offered at Rs. 1,140/100kg (FOR Kandla) without tax. While malt quality is ruling at Rs. Rs. 1,155/100kg.
Mr. Satish Sharma from Satish and Company based in Jaipur says that arrival of new barley has started in Rajasthan and Haryana but it has higher moisture. Supply of malt quality is also limited. Its supply will increase after 15 April. Barley prices are expected to decline by Rs. 100/100kg during initial phase of supply. But the prices will increase by Rs. 100-150/100kg when demand from malt industry will increase.
A prominent trader, who supplies barley to a leading beer company said that actual damage is very limited compared to government’s estimate. He said that malt industry will get required quantity easily. Barley crop is in better condition, so its quality will also be fine so beer manufactures are unlikely to face any issues.
Mr. Dungarmal Sharma, barley stockiest from Kukkarkheda market of Rajasthan said that currently around 3,000-4,000 bags of barley has been supplied in the market.
Lower quality barley is being sold at Rs. 1,025/100kg and higher quality at Rs. 1,100/100kg. He said the quality is not up to the mark and moisture content is high at 16-18 per cent. Arrival of good quality will increase after 15 April. Moisture will also reduce to 11 per cent which is acceptable as per standards. Stockists will show interest for buying after 15 April, he added. As per his calculations, barley may not fall more than Rs. 100-150/100kg.
Prices of barley fell during the last one month. The commodity was ruling at Rs. 1,275-1,350/100kg in Jaipur in early March. Prices fell to Rs. 1,225-1,260 from Rs. 1,250-1,270/100kg in March. Currently, prices are ruling at Rs. 1,460-1,550/100kg in Jodhpur, which was Rs. 1,500-1,600/100kg in March. Barley may fall further by Rs. 40/100kg due to supply pressure but the fall is not sustainable.
Mr. Sanjay Yadav, Director of Gurgoan-based Imperial Malt Ltd. said that barley crop has been damage due to the recent unseasonal rainfall. Rajasthan is experiencing bad weather conditions currently. Current supply contains decolored barley, which is not preferred by malt companies, he said.
Barley arrival reached 4,000-5,000 bags in producing markets earlier but now it reduced to 1,000-1,500 bags. Mr. Yadav said that domestic demand for quality barley is seen at 6 lakh tonnes. But malt companies may not get sufficient barley. In such a situation, they will have to manage with less supply or they will need to consume B grade barley. Imported barley will be costly for malt companies because the prices are hovering at high level due to lower production in Canada. Malt companies will not prefer to import. Around 40 per cent barley is being used by malt companies in the country. Beer demand is increasing in China, so malt production capacity may be increased till 2016-17. India is the second largest producer after China in Asia Pacific region.
Canada: Fall In Production And Export.
According to Agriculture and Agri Food Canada, barley production is expected to fall to 71.19 lakh tonnes this year compared to 102.37 lakh tonnes last year. Production is likely to increase to 21.50 lakh tonnes in 2015-16. Barley export may also decrease from Canada. According to the Canadian department, barley export may fall to 23.50 lakh tonnes in 2014-15 compared to 23.90 lakh tonnes last year. In 2015-16, export may fall further to 21.50 lakh tonnes.
(By Commoditiescontrol Bureau; +91-22-61391533)