China inquiry on Australian barley dumping deemed a political stunt

Business | 19 Nov 2018 3:50 pm

China launched an investigation into whether Australian barley suppliers dumped cheap imports into their biggest market over the past year, catching the grain trade on the hop just as drought shrivels Australian crops and drives prices higher. 

Australia is by far China's top supplier of barley, used both in brewing and livestock feed. It exported 6.48 million tonnes in 2017, close to three-quarters of China's roughly 8.86 million tonnes of imports of the grain, worth about US$1.5 billion, according to Chinese customs, Reuters reports. 

The timing of the move left grain analysts and traders scratching their heads for an explanation, with some among the latter suggesting it may be politically motivated: Australian barley has now become expensive as supplies have dwindled amid extreme drought. 

"It's a bit odd to take this moment to ask the (Chinese) state to put safeguard measures in place," said Even Rogers Pay, an agriculture analyst at China Policy, a Beijing-based consultancy. 

"It's a political stunt," said one Melbourne-based grains trader who declined to be named because he was not authorized to talk to media. 

"It is true that Australian production has grown in recent years, but this reflects the seasonal conditions and strong demand from China from its malting sector and livestock industry." 

High prices have recently curbed demand from China's animal feed makers: Australian barley currently costs about US$275 per ton including freight, about the same price as Chinese corn. 

But China's brewing industry typically pays more for higher grades of the grain, and is likely to be significantly impacted as importers hold off booking new cargoes, said analysts. 

There are currently about 10 to 20 barley cargoes booked for China, said a trader based in southern China who imports Australian barley, declining to be identified. 

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