SASKATOON — Statistics Canada estimated there is less barley and wheat in the country than the best guesses in the trade.
Total wheat stocks were put at 21.53 million tonnes and barley at 7.56 million, as of March 31, compared with forecasts of more than 23 million tonnes and about 8.4 million tonnes, respectively.
Those stocks are up from where they were the same time in 1993; by 4.2 percent for wheat and by nearly 25 percent for barley.
Canada’s stocks of barley are higher than usual because of the abundance of feed wheat Canada has produced in the past two crop years.
Read Also
Agriculture ministers agree to AgriStability changes
federal government proposed several months ago to increase the compensation rate from 80 to 90 per cent and double the maximum payment from $3 million to $6 million
Feed wheat has been competitively priced and that’s helped draw down stocks. That Canada’s oversupply of feed wheat coincided with U.S. floods and a small corn crop was good luck. Feed wheat was able to fill some of the gap in demand in feed markets in the U.S.
Barley hasn’t been so lucky in filling that gap, and so stocks have built up over the last year.
But not as much as expected. That’s resulted in a couple of different lines of thinking on which way barley prices will go this year.
John Duvenaud, publisher of the Wild Oats newsletter in Winnipeg, said that barley is under-priced.
“North America is still tight in feed grains supply,” he said. “Feedgrains is a sleeper.”
Duvenaud said, relatively speaking, the supply of feed grains is just as tight as the supply in the oil markets in North America (canola and soybeans). To him, that means barley has the potential to add to its value in the futures market, especially since farmers told Statistics Canada they intended to plant about 800,000 fewer acres of barley.
Then there’s the bearish side of the market. Dale McKeague, coarse grains analyst at Agriculture Canada’s grains policy directorate in Winnipeg, said there’s not much good to report in the barley market.
Despite reduced plantings and lower-than-expected stocks, Ag Canada is still projecting barley carryover at the end of the crop year will be between 4.6 and five million tonnes.
The American corn crop has been seeded early and is in good shape. As well, USDA has forecast U.S. corn exports will fall this year, while domestic use will rise.
McKeague said that means there will be less demand in the U.S. market for Canadian feed grains.
If barley does get a boost in prices, it will have to come from a concerted sales effort. “It really depends on what kind of export opportunities there are,” he said.
