Tight feed grain supplies will likely buoy barley prices this winter, says an Alberta Agriculture crop markets analyst.
Charlie Pearson told southern Alberta barley and wheat growers Nov. 21 that their location in the province’s prime cattle feeding region puts them in a slightly different market position, but overall tighter supplies will affect prices across Western Canada.
“I think that will support barley through the winter,” Pearson said in an interview after a presentation to growers.
Barley prices didn’t follow the highs of U.S. corn after this summer’s drought in the United States depleted yield, nor did they match the recent steep drop in U.S. corn markets when high prices discouraged buyers.
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“Again, we haven’t rallied as hard, but then we’re not going to drop off as hard, either,” he said.
“In fact, I think we’ll probably flatten out at, in Saskatchewan, something over $5 (per bushel) and then we’re probably going to see something pretty close to $6 in the Lethbridge area through the winter.”
Pearson sounded a note of caution about declining livestock numbers in the U.S. and Canada, which don’t bode well for feed grain demand in the next year or two.
Narrow margins on the livestock side have also encouraged livestock producers to seek alternative feeds and substitutes for more expensive feed grains.
“In terms of your customer, which I guess is a cow or a pig, we’re starting to see some declining numbers and a drought in a time period really when we should start that process of growing livestock numbers again, we’re getting the signals to continue on the current decline, so that’s a little bit scary.”
Hot summer weather reduced barley yields in Canada, and Pearson wondered whether Statistics Canada’s 8.5 million tonne figure will prove accurate.
If so, that will give Canada a one million tonne carryover, which is considered tight.
A hot feed market has also narrowed the price spread between feed and malting barley.
“It’s squeezing up to your malt, and if the maltster doesn’t pay up, then obviously that barley’s going to head off into the feed market,” he said.
Pearson said maltsters have indicated they have enough supply now, but there are indications they will be buying again in spring.
Drought in Russia, Ukraine and Kazakhstan has also reduced supplies. Excess rain is affecting crops in Argentina, and dry conditions in western Australia may affect that country’s yield.
Those factors tend to support current prices, Pearson said.
