Prices down with malting barley glut

North American maltsters have plenty to choose from so bids have dropped more than $1 per bushel since May

A global glut of malting barley is limiting export opportunities for the ample Canadian crop and that is driving down prices, say analysts.

Australia harvested 11 million tonnes of barley in 2016-17, which is a record and 28 percent more than the previous year, according to an estimate by the U.S. agricultural attaché.

Australia is one of the world’s largest exporters of barley. It typically accounts for 30 percent of the malting barley trade and 20 percent of feed barley trade.

That share is expected to grow this year. The attaché forecasts 7.4 million tonnes of exports or 34 percent more than last year. Typically, half of those exports will be feed, one-third malting barley and the remainder shipped as malt.

“Exports of malting barley could rise by one-third to two million tonnes,” stated the report.

This week, the Australian government forecaster pegged barley production even higher, at 13.4 million tonnes.

G3 Canada weather and crop specialist Bruce Burnett said the massive Australian crop is dominating export markets.

“That’s essentially driving the international malting market right now and will for the foreseeable future,” he said.

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Canada was on pace through the first half of the marketing campaign to meet Agriculture Canada’s barley export projection of 1.9 million tonnes but Burnett expects sales to slump in the second half and carryout to blossom beyond the estimated two million tonnes.

Brian Otto, past-president of the Western Barley Growers Association, said Canada has ample supplies of malting quality barley.

“I think last year was an exceptional barley crop, there is no two ways around it,” he said.

Quality held up nicely despite the wet finish to the growing season. The U.S. also harvested a good quality crop with record yields.

North American maltsters have a plethora of malting quality barley to choose from, which is why prices have fallen.

New crop bids for the 2016 crop started at $5.50 per bushel in Sask-atchewan in May. By November the cash price at elevator had fallen to $4.45 to $4.80 per bu. The cash price last week was $4 to $4.25 per bu., according to Prairie Ag Hotwire.

Otto said there is a substantial risk in storing malt barley from one year to the next because the longer it is stored, the more the germination suffers and it can lose its malt status.

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“As a farmer myself, if it’s not going to be used for malt, it will go into the feed market,” he said.

But there is a substantial discount of $1.25 to $1.80 per bu. for selling malt barley as feed in Saskatchewan. Feed barley prices have backed off in recent months due to the glut of feed wheat on the market.

“What it all boils down to is the need for cash flow,” said Otto.

New crop 2017-18 malting barley prices are lower than the same time last year and maltsters are not looking to contract as many acres as last year because of the large supply of malt barley.

“What we’re hearing is some of the maltsters are going to their more reliable producers and people who have been in and out of the market are finding more of a challenge to try and get malt contracts,” he said.

The situation is worse in Montana where there are reports that Anheuser-Busch and MillerCoors are offering between 20 and 60 percent fewer contracts for the 2017-18 crop year, due to the oversupply.

Otto said maltsters should not get too confident about the good supplies because a lot of the malt barley surplus could work its way into the feed market before the next harvest.

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  • P_B

    I have gotten so disgusted working with Busch and their constant load rejections of contracted barley (they can find anything they want to reject it) that I am not going to raise malting barley this year. I am going to raise barley on a limited basis, but we are going to go for yield and plan to sell into the feed market. Now, we need NAFTA to gives us the same access to the Canadian feed market that Canadian farmers enjoy shipping barley south of the border!

    • ed

      Malt Barley market price went to hell with the loss of the CWB.

      • Dennis Weatherald

        Pro cwber but one thing that did change for the better was the ability to negotiate malt contracts directly instead of through a 3rd party.

        • ed

          That has not made up for the high losses on the financial side of the equation that the board could secure. That being said, some are happy to receive less as long as it is more than their neighbors. Kind of a kick the hornets nest and outrun your buddy type of mentality. Not the best for food production, but it has been evolving this way for a while now and going along has always been easier than fighting. Cheap food will be here for a long time yet, so the masses may not need to stress over it too much it appears. Someone will always do it for less.

          • Dennis Weatherald

            As i stipulated before I was pro CWB. Still have a cousin working for G3 (Pat Weatherald). I would agree that the marketing of western Canadian barley as a whole ‘should’ result in better net financial results… On paper it does but on the ground the last 3 years it didn’t on my 4th gen farm because i was able to negotiate my terms and price. Bottom line post cwb some will do better…most won’t!

          • Bruce

            Holy cats, you got that point 100% correct Dennis! Bottom line post CWB some will do better most won’t.

  • ed

    Yes, you are correct. The loss of the board has muted all these markets as to where they would actually be right now. It was a good time for the companies for sure. With costs going up quickly there is a rush on land to try hard to create the economy of scale with lower margins. This concept has never ended well yet unless you can really capitalize on the timing of such pump and dump strategies that are used successfully about 5% of the time in the stock market economy. Food production should be a bit more grounded than that???

    • Harold

      If every Canadian man, woman and child had their needs met, would we give a damn about Trade or even the CWB. Just who are the Canadian people working for? This is where the slave trade starts my friend, and whereby failure, by design, is built into our Canadian systems to ensure that slave trade. The difference between the CWB and what we have now is only a change to the logo on the hat that we wear. Slaves bicker amongst themselves: their Masters do not. When Canadians finally grow up and become a master, only then will the government and the corporate become the slave. (servant) Our Experts are the social engineering of our divisions and bickering and on a mission from government and the corporate for preventing any role reversal.
      As grown up as we think we are, we expect that from the secrecy behind the closed doors of government and the corporate, out will come a birthday cake, candles, and presents. When this doesn’t happen, we bicker about the hat that each have chosen to wear to the event. The sale of the CWB was done in !00% secrecy and sworn secrecy in keeping the information from whom? What do slaves need to know other than the rules of servitude? Notice that the Experts have directed no one to look there, but they do have the fuel for each sides bickering instead. $$$ Seriously, if things are too complicated for the public to understand, then how in the hell can our government understand the same things. Are the politicians brains transformed above our own brains upon their election? Trudeau can prove that they are not transformed, by his only speaking a few sentences, or spending 10 minutes with him, after he quits spewing out prepared monologue and is challenged by a dialogue. (as many politicians are)
      Opening up the Government to find, expose or to prevent their wrong doing seems vastly beyond our focus and our scope of reasoning. Socially engineered?