CNS Canada — Feed barley prices in Western Canada are trending lower, and likely have more room to the downside as new-crop barley hasn’t even started to enter the market.
“Every time we think we’ve found a bottom, it seems to drop again,” said Jared Seitz of Agfinity, an Alberta-based online brokerage. He added “we haven’t even experienced harvest pressure.”
He linked the declining prices more to the ample supply side of the equation than to anything on the demand side.
“It is surprising how many guys still have old crop in the bin,” said Seitz, noting that while waiting to sell paid off last year, the situation in the grain markets was completely different in 2016.
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“We’re still talking to guys with 10 to 20 loads of barley in the bin, who are finally letting it go into the market at these lower levels,” he said.
Over the last year, many buyers were booking coverage up to two months out. “Now that we’ve entered a downtrending market, we’ve noted that the feed buyers are switching back to a two-to-four week period for coverage,” said Seitz. “They don’t want to be long barley either if the market keeps going down.”
Barley prices in the key Lethbridge feeding area have lost $5-$6 per tonne over the past week, with current pricing in the $169 per tonne area, he said.
Spot opportunities into local markets were occasionally available, but were not something to count on, he added.
With the full brunt of the harvest still looming, “unless guys can hold until the New Year, there’s really no point in storing grain if they need to move it off-combine,” said Seitz, adding that “for guys that don’t have the storage, it’s a pointless gamble.”
— Phil Franz-Warkentin writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting. Follow CNS Canada at @CNSCanada on Twitter.
