(Resource News International) — Barley bids in Western Canada have been slowly creeping upward over the past few weeks as producers concerned about the drought conditions for crop production have become very reluctant sellers of the commodity.
“There is certainly the aspect of poor weather for the development of the recently seeded barley crop in Western Canada, providing some of the upward momentum in the cash sector,” said Mike Jubinville, a market analyst with ProFarmer Canada in Winnipeg.
“However, there are also producers who have feed barley to spare, who are not selling given that the hay and pasture situation for cattle in Western Canada is also pretty dire at the moment.”
The pastures have not greened up as they should due to the lack of precipitation, and the quality of the first cut of hay has also been pretty bad, creating concerns about supply for the winter, the analyst said.
“In some cases, livestock producers are still having to supplement rations with feed barley in order to maintain weight gain,” Jubinville said.
He warned, however, that with corn prices in the U.S. undergoing some sharp declines recently and with the outlook calling for additional weakness, the spread between feed barley in Western Canada and U.S. corn has narrowed significantly.
“I think there is a little bit more room for cash barley bids to firm up in Western Canada, but after that, end-users are going to be looking at bringing in U.S. corn, especially if the downtrend in those prices continues,” he said.
There were ideas that corn in the U.S. would again begin to move back up in value after the U.S. Department of Agriculture’s June 30 acreage update is released.
Statistics Canada’s barley acreage estimate, meanwhile, could result in tighter-than-expected feed barley supplies at the same time next year.
The federal statistics agency pegged barley area in Canada as of June 3 at 8.778 million acres. That was below pre-report estimates which ranged from 8.8 million to 10 million acres. The figure was also well below Statistics Canada’s April forecast of 9.476 million acres and compares with the
2008 level of 9.357 million.
Cash bids for feed barley delivered to the elevator in Saskatchewan, based on Prairie Ag Hotwire data, currently ranges from $2.67 to $3.27 per bushel, in Manitoba around $2.98 to $3.39 and in Alberta from $2.33 to $4.25.
Cash bids for feed barley delivered to the elevator in Saskatchewan, based on Prairie Ag Hotwire data on May 26, ranged from $1.36 to $2.77 a bushel, in Manitoba around $2.97 and in Alberta from $2.68 to $3.74.