Australian barley production is forecast to be 7.3 million tonnes in 2004-05, down 1.3 million tonnes from last season, according to ABARE"s Australian Crop report released in September.
It forecast barley exports from Australia, the world"s largest barley exporter, to fall by six percent to 4.5 million tonnes in 2004-05.
However, it also forecast world trade in both malting and feed barley would increase slightly in 2004-05.
This outlook is being driven by expectations that Ukraine barley production is likely to more than double to three million tonnes, making the Ukraine the world"s second largest barley exporter.
Another new element in the barley trade is a decision by the Saudi Arabian government to fix the subsidy it pays to importers at $US40 a tonne. This change is in sharp contrast to the previous policy which floated the import subsidy in order to maintain domestic wholesale prices for $US96 a tonne.
Now, domestic barley prices in Saudi Arabia will change according to movements in international prices. It means import demand in that country will be more responsive to price changes on world markets.