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Export Demand Likely to Boost Barley Prices

06 May 2011

INDIA - Barley is now gaining prominence among an increasing number of health-conscious individuals and malt makers.

As human consumption of the coarse cereal is expected to rise, demand, as well as future prices, are steadily rising, writes Financial Chronical. This rise is despite a higher crop output estimate this year.

Normally grown as a winter crop in the country, barley is gaining in popularity among growers in Rajasthan and Uttar Pradesh with better returns on their investment for second year in a row. Since sowing for the present season crop began in December this year, barley futures prices have gone up by more than 40 per cent.

On close of Saturday's trade, near-month delivery of barley futures rose 2.9 per cent to Rs 1,422 per quintal on NCDEX. Analysts are betting big on the commodity as export demand and speculative buying have already accumulated healthy open interest in the near-month May delivery contract.

"The open interest and volumes are up in the present month contract already. With far-month contracts ruling at higher prices, we are expecting rollovers to future months contracts," said Veeresh Hiremath, vice-president (research) with brokerage firm Karvy Comtrade.

A healthy mix of fundamentals apart, barley is the second largest grown cereal in the world after maize, and is gaining in prices globally as well. India's export demand is likely to see a boost with its lower price and already high clientèle from agrarian economies such as Australia, Latin America and Europe.

"Demand from malt makers and breweries have risen and along with that, demand for good-quality grains. Generally, higher summer demand for beer spikes up barley prices every year, but this is the second good year in a row," said Jaipur-based grains trader Anil Jain.

Procurement of barley by domestic food manufacturers have also promoted demand and spot prices in Jaipur's grain markets has soared to Rs 1,350 from Rs 850 in January. A number of FMCG (fast-moving consumer goods) companies have started using the coarse cereal as part of regular ingredient in their products.

The government too had anno­unced an ambitious plan to take up consumption and production of coarse cereals in the country and had allocated Rs 600 crore in this year's budget. "Availability of better seeds with farmers and newer cropping techniques have also improved barley yield," said BS Makwana, senior researcher for coarse grains with Indian Council of Agriculture Research.

As per latest crop estimates of the agriculture ministry, total production of the annual crop in the present season ending June 30, could be 1,762,000 tonnes, compared with 1,543,000 tonnes the year before. While a majority of this would be contributed by Rajasthan, farmers in Uttar Pradesh also projected barley production to rise 50,000 tonnes to 430,000 tonnes this year. Gujarat farmers too have started replacing one maize season with barley and grow about 33,000 tonnes of the cereal.

TheCropSite News Desk



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