Concern over availability of malting barley has boosted its price spread over feed barley, spurring a $7 per tonne increase for malting grades in the Canadian Wheat Board’s new pool return outlook (PRO).
The CWB on Thursday pegged Select CW two-row malting barley at $251 per tonne in its June 2009-10 PRO, up from $244 in its May outlook. Select CW six-row rose to $231 from $224 per tonne.
World malting barley prices, the CWB said, have strengthened since the last PRO as the market shifts its focus to the new crop.
“Production in Canada, EU and the U.S. is forecast lower, with more downside risk,” the CWB said. “Barley production in Australia is forecast to increase 26 per cent, but dryness prevails in Western Australia, which could limit yield potential.”
As well, the CWB said, the majority of the barley crop in Argentina has received “adequate” rainfall; production there is forecast to increase 10 per cent in 2009.
“The spread between malting-quality barley and feed barley has widened over the past month as more concern over malting-quality supplies arises, but spread should return to more traditional levels in the upcoming crop year,” the board wrote in its outlook Thursday. “Global demand for malting-quality barley is expected to improve slightly from 2008-09.”
Durum, spring wheat
Durum values in Thursday’s 2009-10 PRO also rose by $1 to $4 per tonne depending on grade. No. 1 Canada Western Amber Durum (CWAD) at 11.5 per cent protein, for example, rose to $288 per tonne from $284 in May; No. 5 CWAD rose to $195 per tonne, from $194 in May.
Continued strength in the euro supports durum imports into the European Union (EU), the CWB wrote in its outlook. Closer to home, the board said dry conditions in western Saskatchewan and central Alberta have lowered durum yield potential and put development of North American durum about two weeks behind normal.
Harvest activities in southern Europe are progressing, with “some quality issues arising in Italy,” the CWB said. Europe’s durum consumption, meanwhile, is forecast to exceed domestic production by 20 per cent in 2009-10.
And warm temperatures combined with little rainfall have helped in the durum harvest in North Africa, where production is forecast to exceed last year’s count by “at least 75 per cent,” the board said.
No. 1 CW Feed barley in the 2009-10 Pool A remained flat at $158 per tonne, while spring wheat PROs generally varied by $1 on either side of May’s levels. For example, No. 1 CW Red Spring (CWRS), 13.5 per cent, was pegged at $286 per tonne, up from $285 in May, while No. 2 CWRS (11.5) dropped to $263 from $264.
International wheat values held “relatively stable” this past month as world production is still forecast as the second-largest wheat crop in history. Over the past month, however, North American wheat supplies and quality have become “more of a concern,” the CWB said in its outlook.
And although barley production is forecast to decrease, large carry-in stocks are expected to provide feed supplies similar to 2008-09, the CWB said. Plus, it noted, the U.S. corn situation is providing support to the international feed market.
Pool B, 2008-09
Meanwhile, mixed global feed barley prices left the June PRO for 2008-09 Pool B feed barley unchanged from May, at $163 per tonne.
The smaller forecast U.S. corn crop and concerns over low moisture levels in much of the Canadian feed barley production area are “supportive” of North American feed prices, the CWB said Thursday.
However, nearby prices in Europe have weakened as a result of poor demand and aggressive pricing by Black Sea suppliers, the CWB said.
“With the stronger prices, North American feed barley is being priced out of major Middle Eastern import markets as feed barley from the Black Sea remains the cheapest origin,” the CWB wrote.