Malting barley exports are frothy

Cheers to Canadian barley exporters.

The crop has been moving at an incredible clip so far in the 2017-18 crop year.

Exporters shipped 925,300 tonnes of barley through week 27 of the campaign, an 85 percent increase over the same period the previous crop year.

“It’s pretty phenomenal this year,” said Phil de Kemp, executive director of the Barley Council of Canada.

“Virtually all of that is malting barley for the surging beer market in China.”

Just a little over halfway through the 2017-18 marketing campaign, exports are 425,300 tonnes ahead of last year’s pace.

That brings into question Agriculture Canada’s full-year export forecast of 2.45 million tonnes, which is 128,000 tonnes more than the previous year. The forecast includes the barley equivalent of malt exports.

Brennan Turner, president of FarmLead, believes exports will end up between 2.8 and 2.9 million tonnes, which means carryout will be smaller than Agriculture Canada’s 1.55 million tonne estimate.

Derek Squair, president of Agri-Trend Marketing, agrees that Agriculture Canada is going to have to revise its numbers at some point if exports keep up the current pace.

And he believes that will happen because China’s demand is strong and Canada’s quality is exceptional.

Unfortunately, he does not believe that will result in higher malt barley prices because Canada’s crop was so good that most of the carryout will be malt quality.

“Because of that, the malt prices may not take off a whole heck of a lot,” said Squair.

He is more bullish on feed prices because of the lack of feed quality barley.

De Kemp said there are a number of reasons China is in the market for more Canadian barley.

Australia had a disappointing crop. Growers harvested eight million tonnes, down 40 percent from the previous year.

Australia also had a poor quality crop due to poor harvest weather conditions while Canada harvested one of the best quality crops on record, said de Kemp.

Canada has also benefitted by growing consumption in the world’s largest beer market and Chinese maltster preference for Canadian barley.

“Certainly, they (Chinese maltsters) are increasing their malting barley purchases from Canada considerably, no question about that,” said de Kemp.

But he does not expect the torrid shipping pace of 2017-18 to be duplicated next year because part of this year’s surge is due to the short Australian crop.

“I’m not sure it’s going to be able to hold at those kind of export numbers,” said de Kemp.

“I hope I’m wrong.”

The export numbers are not getting much help from feed barley shipments, which are almost non-existent.

“We’ve lost the Japanese market the last couple of years. We haven’t sold a bushel of feed barley and that used to be a 300,000 tonne market,” he said.

“It literally happened overnight.”

De Kemp said there were complaints in that market about the colour of Canadian barley and about the unreliable supply. Canada was also facing new competition in Japan from countries like Argentina.

The Barley Council of Canada has enlisted Rex Newkirk, research chair of feed processing technology at the University of Saskatchewan’s College of Agriculture, to help create a market for Canadian feed barley in China.

He has met with key people in China’s feed sector to explain the benefits of feeding Canada’s high-protein barley to hogs and poultry.

“We’ve been meeting with some very large feed companies that have significant interest. They’re growing quickly and they want to look at all their options,” said Newkirk.

De Kemp said China’s feed industry is “growing by leaps and bounds” and they are eager to explore alternatives to government-subsidized corn such as imported sorghum, distillers grain and barley.

He said Canada will never be able to compete with Australian feed barley on price but it is higher in protein and that is worth something.

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