Does Barley Make Sense?

Today’s outlook for fall feed barley prices is a far cry from just one year ago. I remember mid-April of last year, we were looking forward to fall prices over $5 per bushel delivered Lethbridge. The first bids are coming out and look like $3.45 per bushel delivered Lethbridge. Quite the difference. The other unusual scenario is that booking is just starting now, five months late. Typically, we start booking fall barley when producers are combining the current crop. Buyers’ thoughts continue to be flat to bearish on feed barley prices. Producers are still contemplating if barley is a profitable part of their cereal rotation. And if they do decide to include barley, what varieties should they grow?

Some grower will stay with malt varieties “just in case” the seed could be selected. That way, there’s an advantage with a potentially higher price in that premium market. The March CWB Pool Return Outlook has Select 2-row barley at $255 FOB Vancouver. Less the $58.11 average Alberta deduction, that gives you $4.29 per bushel at the elevator. Fall feed barley bids are at $160 per tonne, or $3.48, delivered Lethbridge. If a producer seeds a malt barley variety AND actually gets selected, the potential upside in value can be significant. Don’t forget, however, we’re still in the early stages of marketing. The PRO can change, the feed prices can change (up OR down). Plus some areas are simply malt growing areas while other areas never seem to get barley selected for malt. It’s also important to review documented yields for barley varieties in particular locations AND calculate any difference in input costs.

There are other specialty barley markets out there as well. A quick phone call to Alberta Agriculture or a visit to their website and you can discover information on new barley opportunities the provincial government is working on in conjunction with the CWB and other countries. This may be for you.

After reviewing the feed barley prices compared to the malt barley prices, the next consideration may be, “Maybe I should have another look at wheat. If it doesn’t make the grade, it can always be sold as feed.”

Many producers in western Canada have an affinity with CPSR. There are many great varieties available and it’s fairly “easy” for a grower to produce No. 1 or No. 2 in a typical year. Alternatively, CPSR can also be sold into the feed or ethanol markets. The 2009-10 CWB March PRO for No. 1 CPSR is reported at $258 FOB Vancouver. Less the average Alberta deductions of $53 and less $8 for local freight, that equals $197 or $5.36 at the bin. Malt barley is $4.11 at the bin.

After considering ease of attaining top grade, average yields, associated inputs and actual grain movement, you have to ask yourself if the the premium malt barley market makes economical sense? Does feed barley make economical sense? What about rotation concerns? Are there alternative cereals? Besides these questions, global fundamentals of the industry will be a constant concern as usual.

Lastly, if this spring does end up being long and wet, seeding barley may be a part of a producer’s rotation — whether the price is truly profitable or not.

Shelley Wetmore is owner of Market Master, a feedgrain brokerage and consulting service based in Edmonton. You can reach her toll free at 1-800-440-8390 or visit www.grainwatchdog.com.

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