Feed barley exports spark rally

Sellers are benefitting from the competition between grain companies and feedlot owners

Cattle feeders are chasing a western Canadian feed grains market that has been stolen away from them, say brokers and analysts.

The assumption that feeders had all of the Prairies’ barley to choose from has turned out to be wrong now that offshore export buyers have stepped in.

“Some of the feeders are having trouble getting covered,” said analyst Jim Beusekom of Market Place Commodities in Lethbridge. “It’s a good situation if you’re a seller.”

Jared Seitz of the Agfinity online grain brokerage said cattle feeders have suddenly found that farmers aren’t interested in offering much to the Lethbridge market.

“Buyers are on the hunt and we’re just looking for offers,” said Seitz.

The prairie feed market caught fire in late March when elevator companies began aggressively bidding for farmers’ barley. Until that point, there had been almost no export business to draw feed barley away from Alberta feedlots.

The grain companies jumped in, posted good prices and attracted a lot of grain.

The elevator began to seem like a better option than Lethbridge in areas with a hefty trucking cost to reach southern Alberta, such as north-central Alberta and Saskatchewan.

Beusekom said that has forced Lethbridge buyers to trump elevator bids in the southern Alberta region, boosting local prices $10 to $15 per tonne to around $220 per tonne, or $4.80 per bushel.

Seitz said he has seen Calgary-area feed wheat prices rise from $5.10 per bu., picked up, to $5.40.

The anxiety for feeders is greater now because April-June is the traditional high priced barley period. Not only is the export market taking away already low stocks of prairie barley, but road bans and busy farmers should soon reduce sales.

Analyst Errol Anderson of Pro Market Wire called the recent barley rally a “barn burner” and urged farmers to take advantage of it for both old crop and new crop sales.

“We’re peaking,” he said. “It’s a friendly opportunity to the grower.”

Anderson said cattle feeders are bullish about future beef price prospects, so they think they can afford high feed grain prices. However, the justification for higher barley prices will evaporate if beef prices begin slipping, as he suspects they will after the May long weekend.

Seitz said cattle feeders have ended up in a far different prairie feed grains market than they had expected a few months ago. They were able to buy affordable milling quality Canada Prairie Spring wheat even two months ago, but the elevators are now out-pricing them.

“Once again we find ourselves limited to feed grade CPS and hard red and winter wheat, which really limits things,” said Seitz.

Contact ed.white@producer.com

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