Traders said that the price of animal-feed barley is now equal to or higher than milling wheat in Europe, a trend unusually driven by export demand.

Feed barley is typically sold at a significant discount to bread wheat.

The grain industry is heavily supplied, and the price of its overall product has dropped. Its relative strength against the wheat crop has led to higher costs than expected for buyers in North Africa and Middle East.

The availability of barley in the EU has decreased despite a bigger harvest this year. This is due to French shipments to China being brisk, farmers selling slower elsewhere and Turkey switching from an exporter to an importer following a poor harvest.

A German trader stated that "barley is like gold at the moment."

The traders said that the prices of feed barley in the west EU and Baltic were similar to wheat, at around $221-$226 per ton FOB. This was for December loading. Black Sea barley was more expensive with Russian and Ukrainian prices at $227-$229 per ton FOB.

LSEG data show that France has shipped nearly 900,000. metric tons of barley to China and is still loading for Saudi Arabia.

The traders reported that export premiums are now higher than wheat because French farmers have sold out. Black Sea supplies have also been dwindling. Germany is left to fill the gaps.

Barley prices are rarely as high as wheat but the absolute levels remain lower than last year due to ample global grain supplies. Some farmers want better returns on recent purchases made in Algeria, Tunisia, and Turkey.

The trader stated that some sellers speculated they would get $10 more per ton of barley by January.

Jordan's failure to receive any bids in an auction for 120,000 tonnes on Wednesday is a sign of a tight supply.

Some say that large crops in Argentina or Australia could dampen the market soon and prevent the higher costs from being felt further down the food supply chain.

Frontier Agriculture, a British barley merchant, said that the prices of international barley could drop after Christmas. Reporting by Gus Trompiz from Paris and Michael Hogan from Hamburg; editing by Andrew Heavens

(source: Reuters)