Tight supply has growers sitting on barley

Prices are rising and growers are in no panic to sell, especially if they have grain that could be malting quality

Feed barley markets in Western Canada continued to show strength last week with spot bids in some southern Alberta locations edging higher than $205 per tonne.

Allen Pirness, a feed grain trader with Market Place Commodities in Lethbridge, said barley markets have been tight in recent weeks with reduced acreage, lower-than-expected yields and limited producer sales supporting prices.

In mid-September, spot barley bids in Lethbridge were around $195 per tonne. However, values have risen steadily over the past three weeks.

Some southern Alberta feedlots are now beginning to import U.S. corn at around $212 a tonne.

“Barley markets are fairly snug,” Pirness said Oct. 5.

“We’re in a market right now that’s around $205 in Lethbridge. You might even argue it’s $208 … so we’re kind of bumping right up against corn.

“There doesn’t seem to be any excess of barley this year with lower acreage and lower yields … so we’re starting to see the effects of a smaller barley crop already with the price staying fairly firm.”

In addition, wet and snowy weather in late September and early October in Alberta may have discouraged some barley deliveries, adding further support to already firm prices.

“The weather this week hasn’t helped anything to open up,” Pirness said Oct. 5.

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“I’m sure there is some barley that hasn’t delivered this week due to the weather.”

It remains to be seen how in-creased U.S. corn use will affect barley values in southern Alberta.

A few unit trains of U.S. corn originating from North Dakota have already been shipped into the Lethbridge area.

Adding corn to rations will likely affect barley demand, but it won’t necessarily put a cap on barley prices, Pirness said.

To some degree, barley markets can move independently of corn, primarily because some feedlot operators are unwilling or unable to convert to corn for a short period of time.

Feed barley prices typically strengthen in late September and early October, when many growers are still occupied with harvest operations and are not yet fully engaged in selling feed crops.

Deliveries of feedgrains usually pick up two to three weeks after harvest has concluded.

Brandon Motz, market manager with Cornine Commodities in Lacombe, Alta., agreed that barley producers are not selling aggressively.

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“We’ve taken the (feed barley) market from let’s say a $195 delivered Picture Butte a month ago to a $210 or so,” Motz said. “So we’ve rallied $15 in the last month … but still there’s no real panic to sell.”

Motz said weather-related harvest delays may be prompting producers to hold off on delivering barley, despite relatively strong prices.

Quality could also be influencing their selling decisions, he said.

Alberta producers in central and southern growing regions have most of their barley in the bin, and Motz said quality is outstanding.

Some growers hoping to cash in on malting barley premiums may be less inclined to sell into feed markets, even though the spread is smaller than normal.

“There’s outstanding quality so far, based on the samples we’ve received,” he said.

“We haven’t had many years like this where the quality is so consistent, from north to south…. This year’s quality has everyone searching for the highest prices.”

Motz said canola is moving off farms at a fairly good pace so growers may be less inclined to sell barley for cash flow.

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“Barley isn’t necessarily the crop that they’re trying to move at the moment,” he said.

  • ed

    Keep in mind that a quarter section of 80 bushel/acre is worth approx. $7.5 million dollars once turned into beer. That is the equivalent of about $650/bushel or well over $30,000/tonne. There may be room for some movement here yet. But, then again, probably not.