The goods news is that barley users such as livestock feeders will likely pay far less for next fall’s crop.
The bad news is that barley growers will probably get far lower returns for each bushel of barley they sell after next harvest.
Those were the conclusions of analysts who spoke at the Canadian Wheat Board’s Grain World market outlook conference.
“The domestic market will (almost certainly) drop,” said CWB market analyst Peter Watts.
Greg Kostal, an analyst with Sparks Companies Inc., said cash barley prices in southern Alberta will probably be about $125 per tonne in fall 2003, compared to about $145 per tonne for imported corn.
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“The job of barley is to buy back market share it gave up to corn this year,” said Kostal.
The wheat board’s first Pool Return Outlook for 2003-04, which covers the crop that farmers will harvest this fall, pegs No. 1 Canada Western feed barley at $129 per tonne, far lower than present PRO values of $177.
Watts said a normal barley crop in Western Canada of 11-12 million tonnes will eliminate feed barley’s high value that has pleased barley sellers but forced livestock feeders to pay high barley prices or import U.S. corn.
Farmers will not likely find good prices in the export market, Watts said, unless an overseas producer suffers big production problems.
“We don’t expect the international market to be very strong next year,” said Watts. “There’s going to be a lot of competition and barley prices are going to be under a lot of pressure.”
Almost no feed barley was exported by the wheat board this crop year because of high domestic prices.
Next year, the rich Japanese market might buy “a couple of hundred thousand” tonnes of prairie feed barley, but exports will probably come nowhere near 2000-01’s 700,000 tonnes.
Malting barley will likely be more attractive.
“Malting barley prices are probably going to fall Ð if you don’t have any significant production problems anywhere Ð but will still be relatively good returns given the pent-up demand and low stock situation around the world,” said Watts.
