(Resource News International) — Many Prairie producers with selectable barley sitting on their farms may find their chances limited for still having it selected as malting barley.
Tougher malt specifications and a struggling Canadian Wheat Board barley export program are limiting those opportunities. And this year, thanks to good quality and high production, there is no shortage of selectable barley in Western Canada.
With so much selectable barley to choose from, maltsters have been able to toughen up their malt specifications. “In our area barley quality was pretty stellar, so as far as selectable malt goes, the pool is pretty big,” said Jon Fehr, marketing manager for Prairie West Terminal at Plenty, Sask., about 180 km west of Saskatoon.
This year, Fehr said, Prairie West Terminal selected malting barley for domestic maltsters and has already covered its malting barley sales commitments for the current marketing year.
“We’ve taken the best of the best and that has left a bunch of producers with malting barley that maybe don’t have selection contracts for it,” he said.
“Malt specifications are a moving target depending on what the maltster is looking at,” said Bruce Burnett, director of weather and market analysis for the Canadian Wheat Board. “This year they are paying particular attention to some details that maybe last year they didn’t.”
Trade estimates of 2.5 million tonnes of supply already having been selected in Canada as malting barley are “in the ballpark,” he said.
Further opportunities to have barley selected into the CWB malting barley pool will depend on how the global malt market evolves over the next six months.
With the world still in the middle of an economic crisis, it is possible that demand for malt will fall, particularly in developing countries such as China where beer is something of a luxury item, Burnett said.
The relative strength of the euro versus other major currencies will be a key factor as well, as that will help determine the markets in which European malt is competitive.
Hold with caution
The other factor will be the quality of Australia’s barley crop, which so far this year has been down significantly due to untimely rains and drought problems, Burnett continued.
The CWB’s December issue of Go Malting warned there may not be a market for all of Western Canada’s malting barley and encouraged farmers to keep an eye out for good feed barley marketing opportunities.
“Farmers should be cautious about holding on to their barley (if it is not selected already and especially if it is less than excellent quality) in the hopes of getting it selected,” the CWB publication said.
It also notes that together, Canada’s competitors produced 19 million more tonnes of barley this year than last, while total world malting barley trade is expected to top out at a mere 4.2 million tonnes for 2008-09.
Myles Schleper, a grain merchant with Rayglen Commodities at Saskatoon, said this year more barley is entering feed channels that in previous years maybe would have been selected for malting.
That in turn is placing additional pressure on feed prices, which have already come down significantly since the start of the marketing year.
Now, farmers who had been counting on securing higher malting barley prices are having to take feed barley values for their grain, which as of Dec. 22 ranged from $1.90 to $3.74 a bushel (delivered to the elevator) in Western Canada.
The CWB’s pool return outlook (PRO) for December pegged 2008-09 selected CW two-row designated barley prices (in-store Vancouver or St. Lawrence) at $6.97 a bushel, compared to November’s PRO of $7.05 a bushel.
The December PRO for selected CW six-row designated barley stood at $6.53 a bushel compared to $6.62 a bushel in the November PRO.