Strong feed barley exports lift price

The new CPTPP trade deal and production troubles in Australia help prices in Western Canada buck a global trend

Feed barley prices are holding up nicely in Western Canada despite a global glut of the crop, say industry officials.

Prices in southern Alberta are about $200 per tonne. That is down from the summer peak of $290 per tonne, which was expected because this is the post-harvest low period.

However, it is well above the $170 per tonne that feed barley was selling for this time two years ago.

Geoff Backman, manager of business development and markets with Alberta Barley, said that is thanks to robust feed barley exports.

“That has really been reflected in our pricing,” he said.

Brent Johnson, vice-chair of the Saskatchewan Barley Development Commission, said the Saskatchewan price is backed off from the Alberta price by about $50 per tonne.

“It is a decent price for feed barley. If you can get some good bushels you can make money with that, probably better than on off-grade wheat,” he said.

Backman credits trade deals such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership and reduced competition from Australia in China and Japan for Canada’s strong feed barley export program.

The U.S. Department of Agriculture is forecasting 8.4 million tonnes of Australian barley production in 2019-20, which is in line with the previous two drought years but well below the record of 13.5 million tonnes in 2016-17.

Canadian barley exports have been steadily rising the last four years, partially in response to Australia’s woes, soaring to an estimated three million tonnes in 2019-20 from two million tonnes in 2015-16.

That is despite a bearish global supply/demand outlook this year.

World barley production is forecast at 156 million tonnes, the biggest crop since 1994-95.

“Ample supply and flagging demand from major buyers have had a collective weakening effect on feed barley prices,” said the USDA in its Nov. 9 Grain: World Markets and Trade report.

The price gap between feed barley and corn has shrunk from more than US$80 per tonne a year ago to $20 per tonne by October.

“In a world where exporters are seemingly fighting tooth and nail to get their corn into the hands of global customers, barley traders may continue to have difficulty finding alternative markets despite the increasing competitiveness and abundant availability of feed barley,” stated the USDA.

That isn’t the case in Western Canada.

“I would say we are bucking the trend,” said Johnson.

China has developed a voracious appetite for western Canadian barley, especially Saskatchewan barley, which is cheaper than Alberta barley.

Lots of Saskatchewan barley that would have gone to Lethbridge is moving overseas, which is helping prop up prices.

“It’s interesting. I really thought that with the amount of acres that went in that barley prices would crash,” he said.

Johnson believes prices are also being bolstered by delays in getting barley moved to Lethbridge because farmers have been forced to dry their grain and there is a shortage of trucking backhaul opportunities.

Backman said export demand has been so strong that it is causing a rationing of feed barley sales into the domestic market, creating an opportunity for U.S. corn to move into southern Alberta as a substitute feed ingredient.

Buyers in foreign countries are discovering that feeding barley to cattle has certain benefits.

“You end up with a firmer, whiter fat in the animal as well as it impacts the texture,” said Backman.

He said Canadian feed barley fetches a premium in export markets because it is plump, clean and safe.

“That has a lot of appeal to buyers who are looking to feed it to animals, especially when there are global livestock disease issues going on,” he said.

Canadian barley acres have been on the rise the last couple of years after a decades-long downward slide.

They will likely be up again next year if feed barley prices come off their post-harvest lows and reach last year’s levels of about $240 per tonne, said Backman.

Johnson said feed barley prices are at a level where growers might shy away from seeding malt varieties next year unless the premium drifts higher.

He thinks maltsters may be forced to increase the premium due to this year’s shortage of malt quality barley.

“They were sort of rubbing their hands together back there at the beginning of August, but now it’s a total flip on them and they’re scrambling to find product,” said Johnson.

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