Australia sends barley shipment to China after tariffs end

Australia has sent its first shipment of barley to China after Beijing scrapped tariffs this month, with the nation’s trade minister confident that restrictions on other products will be removed as relations improve.

“The first shipment has been dispatched from Kwinana and it’s gradually working its way towards China,” Agriculture Minister Murray Watt said during a press conference in Western Australia on Tuesday. Kwinana is a major export terminal for grains south of Perth that’s operated by CBH Group.

China was the biggest export destination for Australian barley prior to tariffs of more than 80% being slapped on the trade in 2020, with deteriorating relations impacting other commodities such as coal and wine. Traders started booking cargoes of the grain shortly after the duties were scrapped.

Prior to the tariffs wiping out the trade, the China market was worth as much as A$1.5 billion ($966 million) to Australia in 2017-18, according to data from the nation’s agriculture department. The country’s exporters turned to other buyers, ramping up shipments to Saudi Arabia, Japan and Vietnam.

The first shipment to China will be around 55,000 tons of the Maximus variety, CBH Chief Executive Officer Ben Macnamara said at the press conference. The company’s Chairman Simon Stead added that there had been an immediate move in the barley price of around A$50-A$60 a ton since tariffs ended.

“Having China back in the market is definitely supportive of Australian barley pricing,” said Dennis Voznesenski, an analyst with Rabobank. It’s “likely to keep local pricing above average for another year,” he added.

The Majestic Island loaded about 49,000 tons of barley at Kwinana and is sailing toward Esperance, according to a shipping roster on the CBH website, which doesn’t list the final destination of the vessel.

Diplomatic relations between Canberra and Beijing have improved since the election of the center-left Labor government last year, but Chinese tariffs on some of the nation’s commodities still remain including wine. Australia has taken the dispute over wine to the World Trade Organization.

“We still have more to do, we have got to lift the restrictions on wine, on lobster,” Trade Minister Don Farrell said at the press conference. “I’m confident that the good working relationship that we have now achieved with the Chinese government will, in a short space of time, result in all of those restrictions being removed.”