Malt barley outlook promising, but harvest quality will be key

Photo: File

CNS Canada – Many questions remain about Western Canada’s malt barley crop, but many analysts appear to expect at least an adequate harvest.

Quality concerns and yield reductions will hit farmers in southern areas, but for those with good quality, prices should remain at least steady for the medium term.

While analysts cautioned that forecasts can still change depending on the coming harvest, current supply-demand fundamentals point to strong prices.

Bruce Burnett, director of markets and weather with Glacier FarmMedia, said with seeded barley area at 10 per cent less than 2016, volumes were set up to be tight heading into this growing season. Since then, dry weather has compounded the situation.

“I think probably the biggest concern that the maltsters have is how this dryness has affected some of the malting attributes,” he said.

In addition to yield reductions in the dry southern parts of Saskatchewan and Alberta, higher protein content is also expected because it normally goes hand-in-hand with dry conditions.

Maltsters typically want barley with 11.5 per cent protein or less, and that may become difficult to find as the crop comes off the combine.

Maltsters are able to adjust somewhat by talking to their clients and tweaking recipes, but limited supplies of lower protein malt barley could spark more competitive pricing. However, much depends on the quality of the crop now starting to be harvested.

“The way I look at it is, we’ve maybe got half of the puzzle here; where we know production is going to be down so supplies are going to be tight from that. But the second half is how the harvest weather will treat us here,” Burnett said.

Kevin Sich, supply chain director at Rahr Malting in Alix, Alta., said although there are areas where the crop is facing heat stress, he expects the barley crop overall will be adequate.

He said prices have settled in lately at about C$5.50 per bushel, but like other maltsters, Rahr is not currently buying.

Rahr is still working through last year’s supplies and Sich said he prefers to wait and see what the quality and yields will be from the present crop before looking to buy more.

“There’s by no means any reason to push the big red panic button,” he said.

“Overall, I think if you have quality malt barley this year, there is going to be a market for it. There is reduced acres, there’s definite drought stress.”

He added he also expected American buyers to come into Canada looking for malt barley, due to droughts that have ravaged North Dakota and parts of Montana. They too typically contract a longer-term supply.

However, he cautioned that malt barley demand is often seasonal. Farmers who hold onto it too long, hoping for higher prices, may find themselves unable to sell it later.

As an example, he said Rahr usually buys during autumn, but only until it has 10 to 12 months of supply booked. Then it backs away.

“I would just caution farmers that it’s not like, say other commodities that actively trade like canola that you can get a daily price. It’s very seasonal,” he said.

“A lot of these markets usually get absorbed by around Christmas time.”

Export buyers can be price sensitive and pull out when prices reach a certain level, he said, and the Australian winter-seeded crop, which comes out in December or January, can pull on prices.

As well, the strengthening Canadian dollar could made Canadian barley less attractive to some buyers.

Mark Green at Central Ag Marketing said maltsters his company has contacted are also staying out of the market.

“We’ve been calling them and emailing them and stuff and we haven’t heard from them,” he said. “They’re kind of sitting on their hands at the moment.”

He said that surprised him, given the drought reports from U.S. barley areas and the southern Canadian Prairies, but maltsters appear to be waiting for more information about the state of the current crop, he said.

Green added that rising prices for feed barley will also pull malt barley prices higher.

He said most of the barley north of Calgary is in decent shape and he “definitely sees the market headed up.”

About the author

Glacier FarmMedia Feed

GFM Network News

Glacier FarmMedia, a division of Glacier Media, is Canada's largest publisher of agricultural news in print and online.



Stories from our other publications