Tight logistics underpin barley in feedlot alley

Winnipeg (MarketsFarm) – The adverse 2019 harvest across Western Canada may have left more grain grading as feed than normal, but transportation issues moving that barley and wheat where it needs to be continue to prop up prices for the time being.

“We’ve seen a rally in the feed barley market the last four weeks,” said Brandon Motz, of CorNine Commodities in Lacombe, Alta. “Early on it was due to the late harvest, and now it has just continued on due to freight pressure and high demand,” he added.

“Lots of people maybe own the grain on paper, but aren’t able to get it in. So the industry as a whole is trying to keep coverage for the feedlot,” said Motz.

Feedlots are running at high capacity, which is a bit abnormal for this time of year, according to Motz. In addition, the delayed harvest caused feeders to draw down their supplies to the bottom of the bin, as they waited for the new crop. End users are now filling the bottom of the bin, instead of keeping the top full.

Trucks are also in short supply, due in part to high demand, a lack of backhaul opportunities to Saskatchewan, and a reduction of operators in recent years.

“You have a perfect storm,” said Motz on the numerous factors propping up bids. He expected the higher prices would remain “as long as freight is hard to get.”

As soon as more grain starts moving and cattle feeders have resupplied to the top halves of their bins, then he suspected prices would come down.

A strike at Canadian National Railway (CN Rail) has not yet impacted the feed market, but does add an extra level of uncertainty. Motz said barley rail shipments from Saskatchewan to Alberta were expected to start up in the New Year, but could be hampered depending on how long the strike lasts.

“It is definitely something the industry needs to be watching.”

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