Bleak. Tough. Grim. Pressure. Downer.
Those are a few of the words tossed around by market analysts last week at they talked about the 2009-10 outlook for feed barley.
Big world stocks of coarse grain, large barley crops in Europe and the Black Sea region, lower demand from the livestock industry and stagnant trade combined to leave little room for optimism.
“Lower trade and high supplies together are not a pretty picture for the price outlook,” said Arvin Pirness, market analyst with the Canadian Wheat Board.
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“It probably is a bit of a bleak year,” agreed Alberta Agriculture barley market watcher Charlie Pearson.
“I don’t see any short-term positive change.”
He said a big U.S. corn crop, along with high world coarse grain supplies, will keep pressure on feed barley for the foreseeable future.
None of this will come as a surprise to farmers who follow market reports. Cash feed barley in the Lethbridge area last week was at $143 to $152 per tonne.
The latest PRO for 1 CW feed barley Pool A is $145 a tonne basis export position, which works out to a Saskatchewan price of $78.89 per tonne or $1.72 per bu..
That’s down $23 a tonne, or 13 percent, from the 2008-09 PRO for pool B.
However, it’s also a price few producers will see because export sales of feed barley are expected to be around 100,000 to 200,000 tonnes at most, Pirness said.
“Given the availability, trying to compete in the export market against the Black Sea production is extremely difficult,” he said.
Ukraine has produced its second consecutive 12 million tonne crop, well above normal, and is exporting it at a price equivalent to about $1.30 a bushel in central Saskatchewan.
Meanwhile, the domestic market is trading around $2.40 a bu. in central Saskatchewan and $2.75 to $3 in central Alberta.
“There is no incentive for anyone to sell into the export market when the domestic market is stronger,” Pirness said.
Pearson said he’d be surprised if the CWB did any export business at all
“That’s a pretty tough market to do business in.”
Wait and see
Brian Otto, a farmer from Warner, Alta., and president of the Western Barley Growers Association, said most growers he has talked are waiting to see what happens in the market before making major decisions.
Many were spoiled by prices in the $4.50 per bu. range a few years ago and keep hoping for a repeat.
“It was a beautiful sight, but anyone who thought we’d see it again any time soon was just dreaming,” Otto said.
Producers who locked in prices at feedlots earlier this year have seen their product move; those who didn’t are in a wait and see mode.
He said prices are low, but growers can still turn a small profit in the current market.
“It’s not great, but barley is fairly cheap to produce, not a lot of input costs, so it will still make some money for producers.”
In a barley market outlook released last week, Agriculture Canada predicted domestic feed use will decline in 2009-10 due to lower livestock numbers, and the non-board price for feed barley will be about $25 a tonne lower than 2008-09.
It also said a smaller crop will result in year-end stocks of 1.8 million tonnes July 31, 2010, a decline of 37 percent from 2.8 million tonnes a year earlier.
