Excellent quality sends malting barley price down

Ample supplies of malt barley have led to soft prices and the only hope for turning things around hinges on a poor Australian harvest.

Rod Green, a barley broker with Central Ag Marketing Ltd. in Airdrie, Alta., said the condition of Canada’s crop couldn’t be more different compared to last year, when there were a lot of sprouting and germination problems.

“This year the barley is bright, white and there is no rain on it for the most part,” he said.

The only quality concerns that showed up are south of the TransCanada Highway where there are issues in some areas with seed that isn’t plump enough or too high in protein. North of Highway 1, the quality is excellent. Green didn’t want to take a stab at total production.

“Let’s just put it this way, there is no shortage of malt barley and producers who didn’t have a production contract are struggling to find a home for malt barley,” he said.

“Until the elevator companies really get some good exports on (the books) their bids are comparatively low right now.”

Bruce Burnett, director of markets and weather with Glacier FarmMedia, agrees that there are ample supplies.

“It’s certainly enough for the domestic and any export business we want to do,” he said.

The abundance of quality crop is pressuring prices lower. When farmers contracted barley in the spring, there was a healthy premium over feed barley but prices are now converging, with only a 25 cent per bushel premium in some locations.

“For people who are growing malt that’s certainly not a good price because they are expecting to get a premium for the quality they are producing,” he said.

Canadian maltsters are covered for the most part, while exporters have not been buying the crop of late.

There is stiff competition in export markets due to big crops in the European Union and the Black Sea region. This year the EU produced a good quality crop instead of the disaster it had last year.

Australia, which is the world’s second largest barley exporter behind the EU, is going to have a smaller crop due to extreme drought in large areas.

The Australian Bureau of Agricultural and Resource Economics forecasts eight million tonnes, which would be 40 percent smaller than last year’s crop despite similar seeded area.

Protein levels tend to be higher in drought years, which is a problem for malt barley. But not all of the crop was grown in the drought regions and with recent rain there is also a chance for recovery.

Most of Australia’s barley is in the heading stage of development and won’t be harvested until November or December. If the drought continues or the crop receives rain during harvest and drags the quality down it could create a window of opportunity for Canadian growers.

“Maybe this provides some hope for additional export sales,” said Burnett.

It all depends on the extent of the damage and how high the protein levels get, so it is still a long way from being a certainty.

“I don’t want to give false hope here,” he said.

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