CHINA is starting an anti-dumping investigation on imports of Australian barley, sending a signal the world's top commodity buyer may be increasing scrutiny of one of its most important suppliers.

The one-year probe will start on Monday, and could be extended to May 19, 2020, according to a statement on the Ministry of Commerce's website. Australian barley is being sold at "lower than normal" prices, and China's domestic industry has suffered as a result of the cheap supply, it said.

China is Australia's biggest buyer of barley, purchasing about US$1.28 billion worth of the commodity last year. While iron ore, coal and wool are more significant for Australia's exports, the investigation into barley is a sign China is willing to strain a traditionally strong trading relationship amid sharpening political tensions with Australia and the trade war with the US.

"It's more about political relations" than economic concerns, said Ma Wenfeng, an analyst with Beijing Orient Agribusiness Consultant Co. The move almost immediately follows Australia's decision with the US to jointly redevelop a naval base in Papua New Guinea and is likely in retaliation to that, he said. "Based on our calculations, there is no dumping of Australian barley on the domestic market."

The investigation has come as a drought ravages Australia, bruising its barley business. Imports of the grain doubled on the year to 6.5 million tonnes in 2017, China's official customs data showed.

However, Australia's output this year is likely to sink 7 per cent, reducing total exports by almost 40 per cent in the 2018-19 season, according to the nation's government forecasts. A survey by industry group INTL FCStone Inc predicts this season's crop may be as low as 6.6 million tonnes.

"Australia does not dump barley," said Tony Russell, executive manager at Grains Industry Market Access Forum, which represents members in the grains industry and works with the government in Australia.

"It is not dumping but we are perplexed as to what it might be. We are quite confident we can justify our trading position and our position in relation to dumping."

Meanwhile, China may struggle to meet its brewing industry's burgeoning consumption of barley.

Given concerns over quality, China can't fill that demand domestically, and the anti-dumping investigation may raise domestic beer prices, Beijing Orient's Mr Ma said. China needs to import 2-3 million tonnes of brewing-quality barley a year, said Cherry Zhang, an analyst with Shanghai JC Intelligence Co.

The probe may have little impact on barley used in animal feed. China's mills are reducing shipments because import prices are already higher than the cost of domestic corn, Ms Zhang said. When prices were cheaper, Chinese feed mills had used imported barley as a substitute for corn, she said.