Saudi Cuts Import Subsidy on Barley Again, CBH Says

By Madelene Pearson

Nov. 25 (Bloomberg) -- Saudi Arabia, the world’s largest barley buyer, has slashed import subsidies for a second time, reducing them to about a quarter of their original level and helping to cut demand for the grain, CBH Group said.

The government has cut subsidies paid to importers to about $80 a metric ton from $200, Josh Roberts, senior trading manager with CBH’s GrainPool unit, said today. The government had previously cut the subsidy to $200 from about $320, he said.

Buyers in the Middle East nation are reluctant to purchase the grain following the subsidy cut, ABB Grain Ltd., Australia’s largest barley exporter, said today. Barley is used mainly by the Bedouin people in Saudi Arabia to feed livestock.

“They are only coming to the market when they need the grain and there’s ample grain supplies available,” Michael Iwaniw, managing director of Adelaide-based ABB Grain, said today on a conference call. “Saudi buyers are reluctant to buy where they were falling over themselves to buy last year.”

Barley futures in Winnipeg have almost halved since peaking this year at C$281 ($226) a ton in July. The most-active contract traded at C$157 a ton yesterday.

Production gains in Australia, Europe and the Black Sea have caused an “abundance” of feed barley this year, CBH’s Roberts said. Demand from Saudi Arabia has also slowed as the country has inventories and recent rain provided pasture, he said.

“The demand from Saudi recently has been slow,” Roberts said. CBH is Western Australia state’s biggest grain handler and marketer. “There’s plenty of feed barley in the world today compared to a year or two years ago, so as that more abundant supply has been available the government has reduced the subsidy support.”

To contact the reporter on this story: Madelene Pearson in Melbourne on mpearson1@bloomberg.net