Barley prices are up, but not high enough to encourage a large increase in Western Canadian seeded acreage.
The Canadian Wheat Board January Pool Return Outlook for feed barley is $5.86, or $269 per tonne for the 2007-08 crop, the highest ever, and there is optimism for continued high prices into 2008-09. But prairie producers aren’t likely to fill their seeder tanks with extra barley seed this year.
The reason? Wheat prices that are even stronger, attracting producers to that crop, said Mike Jubinville of Pro Farmer Canada in Winnipeg.
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Jubinville said producers will take their chances with spring wheat and durum this year rather than barley, despite barley prices that could potentially yield $350 to $450 per acre for grain picked up at the farm in the fall of 2008.
World barley ending stocks for 2007-08 are expected to be about 15 million tonnes, the lowest since the late 1980s. That is producing strong prices.
“At port in Vancouver barley is $280 (per tonne). If you could sell outside the board, you could get about $4.25 to $4.40 backed off (for freight and handling) to Saskatchewan. In Alberta that’s $4.40 to $5.
“Look at the PRO and you can see the CWB has really created a floor price for barley of $4.25 on the Prairies, for the coming crop. Most growers (selling to the domestic market) will do better,” he said.
Carryout stocks of barley on the Prairies were about 1.5 million tonnes for 2006-07.
Agriculture Canada expects 2007-08 carryout will fall to 1.3 million tonnes, with stronger exports offsetting reduced domestic feed demand as more livestock are sent to the United States to be fed on cheaper corn.
Agriculture Canada forecasts 2008 barley area at 10.92 million acres, almost steady with 2007.
Corn prices set the context for feed grain prices.
A Reuters poll in early February of American trading companies found that on average they thought U.S. corn prices at the end of 2008 would be a little stronger than $5 per bushel.
The range of estimates was $4.10 to $6.35 per bu. and the average was $5.13.
The same poll produced an average corn seeding estimate of 89.08 million acres, down from 93.6 million last year.
Most of the shift would favour soybeans, which are also in short supply, but U.S. corn production can’t fall too far because demand will likely increase in the new crop year.
U.S. legislation requires at least 34 billion litres of ethanol made from corn to be blended into gasoline in 2008. The requirement rises to 39.7 billion litres in 2009 and 56.8 billion by 2022, guaranteeing long-term demand for corn.
Profitability problems in the livestock sector might shrink U.S. domestic feed corn demand, but export demand is likely to remain strong in 2008-09.
Global corn availability tightened in December when worries about food inflation caused China to implement restrictions on its corn exports.
Agriculture Canada expects world barley production will rise six percent thanks to revived production in Australia and increased acreage in Russia, Ukraine and Canada.
This increased supply should increase competition for trade and reduce Canada’s exports from the high level posted in 2007-08.
Agriculture Canada says this combination of factors is likely to maintain the trend of tight world coarse grain stocks and could generate slightly higher average corn prices, but feed barley prices down slightly from the strong levels posted in 2007-08.
