Alberta feedlots scramble for trucks | A slow start to spring could see more barley acres, weakening prices
The next six weeks will likely be the best time to sell feed barley this year, says an Alberta grain merchandiser.
In most years, western Canadian feed barley prices reach a low in February and peak in May. That historical trend is part of the story this year, but a shortage of grain trucking capacity has pushed prices even higher this spring.
“We can’t get enough trucks anymore to get the grain (barley) out of Saskatchewan and into Alberta,” said Jim Beusekom, owner of Market Place Commodities, a grain merchandising company in Lethbridge.
“The local guys (in southern Alberta), they keep selling. They can still access the market, but they keep asking more money for their grain…. If you’re in an area where a grain company is calling you and (it) has logistics to move your grain, seriously look at selling it.”
Feed barley prices in Lethbridge dipped to $150 per tonne in January, but have climbed steadily since then, hitting $200 a tonne in late April and early May.
Beusekom said several factors are propping up prices:
Barley moves directly from the farmgate to feedlots in Western Canada, so prices rise when it’s the least available. That often occurs in the spring because farmers are busy seeding and road bans are in place.
Southern Alberta feedlots have imported dried distiller grain corn from the United States for 20 to 30 percent of their ration for the last several years. The price jumped this year, and feedlots are buying more barley.
A lack of grain trucking has forced buyers to pay more for feed barley.
“It’s a bit of a giant funnel effect. All the grain that’s close to Lethbridge, stocks are not that high at all. They (farmers) have been selling,” Beusekom said.
“Now, as we have to go further out, we’re trying to find more trucks and compete against other commodities to get the trucks…. We have to pay a lot of money for truck freight to get it out of areas in central and northern Alberta and Saskatchewan.”
Barley stocks are substantially higher than last year, thanks to a bumper harvest last year. Statistics Canada reported May 5 that barley stocks were 4.3 million tonnes as of March 31, up from 3.04 million tonnes last year.
The feed barley price spike may persist, despite oversupply, because buyers will likely struggle with freight logistics for two more months, Beusekom said.
“I think it will last until summer, until that July time frame,” he said, which is when the number of cattle on feed declines seasonally.
Statistics Canada is forecasting acreage of 6.3 million, down from 7.08 million in 2013 and 7.4 million in 2012. Only a decade ago, Canadian farmers seeded nearly 11 million acres of barley.
Jason Skotheim, a grower from Spruce Home, Sask., said a decline in Canadian cattle numbers partially explains barley’s decline.
“We used to have cattle and barley was an absolute fixture within our rotation,” said Skotheim, vice-chair of the Saskatchewan Barley Development Commission.
“You (found) a way of feeding it to your own cattle or (sold it).”
Brian Otto, Barley Council of Canada chair and a farmer from Warner, Alta., said the slow start to spring could push barley acres higher.
“Usually (on his farm) we’re heading into seeding the 20th of April. Here we are the fifth of May and we haven’t really had a good whack at it,” he said. “The later the season goes, then people will start choosing the shorter season crops. That’s where barley fits in.”
Beusekom said the Statistics Canada acreage estimates are reasonable, considering price, stocks and barley’s competitiveness to other crops.
The barley market should return to normal if prairie farmers produce a normal crop, he said. Prices could stagnate for months if there’s another bumper crop.
Therefore, he’s encouraging growers to sell now.
“A lot of producers spent a lot of time being unhappy this winter about how low prices went,” he said.
“You could get into a situation this fall where there’s all kinds of feed again, so you’ll be wishing you did sell.”