Lethbridge barley still hasn’t found a bottom

It’s been a volatile year for Lethbridge barley, with prices moving as high as $300 per tonne in early summer, from where one Lethbridge barley broker sits, noting a bumper crop sent the market in a steep decline that’s expected to continue into 2014.

“Well, we went from a market in January through July where sellers, basically to some extent, had some control over the shipment and price of grain. Obviously that’s why we saw the market peak out in May at around $300 a tonne in Lethbridge,” said Jim Beusekom, grain broker at MarketPlace Commodities.

“Now we’re sitting in a surplus situation on feed grains and the markets are down. It started in August at a free fall, levelled out through harvest, and right now they feel like they’re going to free fall again.”

Despite the noted surplus of barley, recent price declines seen in December have been due to competition from other commodities for a spot in the local feed marketplace, Beusekom said.

“We started December trading Lethbridge barley at around C180 per tonne and currently we’re trading Lethbridge barley at $160 per tonne,” he said. “There’s a surplus of barley, but it’s the effects of other commodities on barley that’s causing it to drop here. Normally in December we see the market fairly flat, but this year we’re getting so much competition from wheat right now.

“I think we can expect further price declines into the New Year as the market continues to fight for space and homes in the feed market.”

Beusekom said he doesn’t know how far the market could fall, but noted it’s been to even lower levels in the past decade.

“Go back to 2009-10 and Lethbridge barley was trading in the $140 to $145 (per tonne) range,” he said. “Go back eight or nine years ago and we’re trading Lethbridge barley at $105 to $115 per tonne. So, I don’t really know where the market’s going to go, but people have to be aware that it’s not that many years ago that it was that cheap.

“I think it’ll find a bottom and then trade there.”

– Brandon Logan writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.