Saudi Arabia’s largest barley buyer cuts purchases from the Black Sea region

United Group, Saudi Arabia’s largest barley buyer, is shifting purchases away from the Black Sea region to alternative suppliers amid disruptions to grain exports from Ukraine and Russia. About a quarter of the company’s imports came from the Black Sea region in the first half of the year, but this share is now declining.

Argentina is emerging as one of the main alternative suppliers. The country could account for around 30% of United Group’s purchases this year, up from about 20% last year. The company is also buying barley from Romania, Bulgaria and France, while considering supplies from Australia and the Baltic states.

Reduced availability of Black Sea grain has already driven import costs sharply higher. According to United Group, barley delivered to Saudi Arabia is now as much as 25% more expensive than two months ago. The company imports millions of tons of barley annually, while Saudi Arabia is the world’s second-largest buyer of the grain.

Additional pressure on logistics is coming from disruptions to shipping through the Strait of Hormuz. This has increased the importance of Saudi Arabia’s Red Sea ports for grain shipments to Gulf countries, while freight and insurance costs are also rising.

Higher barley prices could increase feed costs and squeeze margins in the livestock sector, particularly for poultry and lamb producers. United Group expects some of the additional costs to eventually be passed on to consumers and affect food prices.

Tags: barley, Saudi Arabia, Black Sea region, Argentina, alternative routes, Hormuz, grain