Barley area seen up despite poor cash bids

(Resource News International) — The area seeded to barley by producers in Western Canada may actually be higher than anticipated despite cash bids for the commodity remaining depressed.

“While it’s hard to conceive that barley area will increase given the poor cash bids for the commodity and the likelihood those values will remain depressed heading into the 2009-10 crop year, current weather conditions could still cause seeded area to be even larger,” said Mike Jubinville, an analyst with ProFarmer Canada in Winnipeg.

Barley, he noted, is a short-season crop and given that producers have not been very successful in seeding due to wet conditions in eastern Saskatchewan and most of Manitoba, the crop may still get some serious consideration.

Statistics Canada in its April 24 planting survey estimated seeded area to barley in Canada this spring at 9.476 million acres, up from the 2008 level of 9.357 million.

Most industry participants are of the belief that barley area needs to be lower, especially with prices reflecting the large supply situation, said Chris Beckman, an analyst with the market analysis division of Agriculture and Agri-Food Canada in Winnipeg.

“Producers normally use prices as a guideline for determining what to plant in the spring, and right now prices are pretty poor,” he said.

Grain companies, meanwhile, use the supply situation as a gauge in where prices need to be, and with stocks of barley large, prices are down.

StatsCan, in its grain stocks in all positions report May 8, put Canada’s barley supply situation as of March 31 at 6.054 million tonnes. This came in above pre-report expectations that ranged from 4.5 million to 5.3 million tonnes and surpassed the year-ago level of 4.46 million.

Based on the fact that stocks are in the burdensome range, Beckman felt that seeded area to barley should definitely be lower than what the seeding survey suggested in April.

“If conditions were closer to normal, we probably would have seen barley area switched over into canola,” Beckman said, especially with canola cash bids back over the $10 per bushel level.

Jubinville also noted that producers in Alberta were unlikely to cut barley area, given provincial government programs that provide a base price for feed barley.

“Essentially it’s a spring price endorsement which provides a floor price for feed barley, and right now that price is already higher than values that are available from the industry,” he said.

“That will keep barley area in Alberta at least stable with last year’s level if not a bit higher.”

As for why producers are planning on putting in barley given the poor price outlook, both Beckman and Jubinville were unsure of the reasoning.

“Maybe producers are looking six months out and seeing something different than I am,” Jubinville acknowledged.

Cash bids for feed barley delivered to the elevator in Saskatchewan at the beginning of May, based on Prairie Ag Hotwire data, ranged from $2.50 to $2.77 a bushel, in Manitoba from $2.52 to $2.83 and in Alberta from $2.36 to $3.59.

On April 24, feed barley bids delivered to the elevator in Saskatchewan had ranged from $2.44 to $2.66 a bushel, in Manitoba from $2.52 to $2.94 and in Alberta from $2.48 to $3.59.

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