In dumping probe, China spooks Australia grain trade already sweating out drought hit
* Australia is China's biggest supplier of the grain
* Investigation into barley imported for brewing, livestock
* Imports from Australia up 67 pct 2014-2017 -probe
* Prices slipped nearly a third in same period -application
* Follows period of tense diplomatic ties between countries
(Adds Australian government statement)
BEIJING/SYDNEY, Nov 19 (Reuters) - China on Monday launched
a probe 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.
Coming amid strained diplomatic ties between Beijing and
Canberra, the move by Beijing's commerce ministry comes after
the China Chamber of International Commerce complained that
Australian barley was sold at lower-than-normal prices for the
12 months through September 2018, hurting domestic suppliers.
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 $1.5
billion, according to Chinese customs.
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
"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
The probe follows a period of tense relations between
Australia and China. Former Australian prime minister Malcolm
Turnbull accused Beijing of interfering in its domestic affairs
while in office, and the two countries have been jostling for
influence in Pacific island countries that control swathes of
"Australia will mount the strongest possible case to uphold
the integrity and market access of our world-leading
agricultural producers against these unsubstantiated
allegations," said Australia's Minister for Trade, Simon
Birmingham, in a statement issued later on Monday.
Birmingham said regulatory authorities were simply "doing
their job" by investigating claims made by local business. He
said the application for the probe had been lodged "many weeks
ago" and that in the last two weeks the Prime Minister, Foreign
Minister and Trade Minister have had "positive engagements" with
The probe starts on Monday and will end within one year,
with an option for an additional six months of investigation.
The Chinese commerce chamber's request for an investigation
said the volume of barley imports from Australia jumped 67
percent from 2014 to 2017 while prices slipped to $198.05 per
tonne, nearly a third below their 2014 level.
As part of its probe, the ministry will also look into
whether domestic suppliers' business was damaged in the period
from Jan. 1, 2014 until Sept. 30, 2018. China produced 1.66
million tonnes of barley in 2017, according to the commerce
chamber, down from 1.81 million tonnes in 2014.
"It's a political stunt," said one Melbourne-based grains
trader who declined to be named because he wasn't authorised 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
High prices have recently curbed demand from China's animal
feed makers: Australian barley currently costs about $275 per
tonne 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 as he is not
authorized to talk to the media.
At China Policy, analyst Pay said, "It will put a huge
amount of pressure on the industry, especially brewers, to forgo
or pay higher prices for Australian barley."
"But this past year has made it pretty clear that there's a
willingness to take steps that will have short-term consequences
[on domestic industry]," Pay said, referring to China's decision
to impose 25 percent duties on soybeans from the United States,
its No.2 supplier.
(Reporting by Dominique Patton and Hallie Gu in BEIJING and
Colin Packham in SYDNEY
Editing by Kenneth Maxwell)
First Published: 2018-11-19 03:06:33
Updated 2018-11-19 10:29:56
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