Ceiling still far off for rising feed barley market

(Doug Wilson photo courtesy ARS/USDA)

CNS Canada — Feed barley prices in Western Canada have climbed steadily higher over the past few months and have more room to go, before strong prices inevitably make U.S. corn imports more attractive.

“The feed barley market is hot,” said Jerry Klassen, manager for Swiss-based GAP SA Grains and Products in Winnipeg.

Aadverse weather over the growing season, logistics issues and the smaller barley crop were all contributing to the strength, he said.

“The barley fundamentals are relatively tight, and the market is firming up,” said Klassen.

Canada only grew 7.12 million tonnes of barley in 2014-15, according to Statistics Canada data. That’s well below the 10.23 million tonnes grown the previous year and the smallest crop since 1968.

Agriculture and Agri-Food Canada currently forecasts ending stocks falling down to 700,000 tonnes by July 31, 2015 — more than a million tonnes below the 2013-14 carryout.

Feed barley bids in the key livestock feeding area of Lethbridge have risen by over $15 per tonne over the past month and were averaging $194 per tonne by mid-November, according to data compiled by the Alberta Canola Producers Association.

Barley bids could rally by as much as $30 per tonne more over the winter, Klassen said.

“We saw the market rally last year in the spring when we had a fairly large carryout,” he said. “This year we’ll have a very tight carryout and we’ll probably see the market rally again — a little bit sooner, because of the tight supply.”

However, if barley rallies as much as expected, “we’ll start to see more U.S. corn come into southern Alberta,” which would put a cap on further strength, according to Klassen.

— Phil Franz-Warkentin writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.


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