CNS Canada — With feed barley in tight supply, the tables have flipped with feed prices now sitting higher than those for malt barley in Western Canada.
Feed barley prices “make some of these other prices look a bit ridiculous. There’s no demand from the domestic maltsters because they’ve all been plugged up ever since harvest,” said Rod Green with Central Ag Marketing at Airdrie, Alta.
Old-crop feed barley is trading at over $5 per bushel while malt is around $4.25 per bushel. Feed barley has been feeling pressure due to higher export volumes and rising corn prices, caused by drought in Argentina.
As of March 4, Canada has exported 2,016,400 tonnes of barley compared to 1,550,300 last year, according to data from the Canadian Grain Commission.
Last year’s malt barley crop featured great quality across Western Canada, except for south of the Trans-Canada Highway where drought hit the region. Domestic demand was quickly filled and a drought in Australia led to increased demand from China.
According to Green, Chinese buyers prefer the Metcalfe barley variety with a bit higher protein level, leaving a lot of lower-quality Metcalfe and Copeland barley sitting in bins on the Prairies.
“There’s a lot of farmers wrestling whether to sell old-crop malt barley for feed or for malt,” Green said.
Looking toward the upcoming growing season, Green already has all of his contracts for malt barley filled until September 2019. Green deals primarily with domestic buyers.
“We’ve got a pretty steady demand (domestically). The beer consumption in North America is not rising; it’s falling slowly as we lose market share to wine and hard liquor, not in a big way but in a small way,” he said.
The rise in craft beers is helping offset the hit from falling beer consumption. Craft beer requires more barley as it is made from malted barley, yeast, water and hops. Big-box beer, however, is made from ingredients such as corn syrup and rice.
“The increase in the craft industry is slightly increasing the demand for malt barley,” Green said, “but you’ve got to realize that we’re still only at, I think the craft beer was about 10 per cent of market share right now, so it’s not a huge factor.”
Green thinks there could be a change in the kinds of barley varieties seeded this year. Producers have tended to seed varieties more suited for malt, but with feed barley prices higher, Green thinks producers could shift to seeding more feed varieties.
“I think, given the uncertain nature of the pea and lentil market and the current strength in feed barley, that certainly my outlook(s) for acres are a lot more friendly to barley than they were say in January,” he said.
Agriculture and Agri-Food Canada is predicting a slight rise in barley acres. In its outlook for principal field crops, released in February, AAFC predicted more than 6.1 million acres of barley to be seeded this year, compared to 5.8 million last year.
New-crop malt barley prices are sitting around $4.75 to $5 per bushel, delivered to elevator. Domestic demand should hold steady, according to Green. However, international demand will depend on the weather in Australia.
— Ashley Robinson writes for Commodity News Service Canada, a Glacier FarmMedia company specializing in grain and commodity market reporting.