Feed barley prices have no business being where they are, based on supply-demand fundamentals, but that hasn’t quelled the rally.
With prices for old crop sitting a premium over new crop, most in the industry expected old crop would gradually decline over summer and the two would eventually converge.
But dry weather in southern Alberta and parts of Saskatchewan has sent cattle home from pastures early and that has raised questions over how much feed will be available.
“But now there’s a bit of a last-minute scramble to get hands on the last of the old crop feed grains and we’re seeing in just a few days here this week, prices jump up,” said Jared Seitz, co-owner of Alberta-based Agfinity.
He said offers for old crop feed barley have climbed by as much as 50 cents per bushel recently.
Bids in the Calgary area were offering C$5.10 for old crop, picked up, deferred to September to December. New crop bids were around C$4.90 per bu.
He said feed barley prices had been falling from this winter’s highs over recent weeks, but then abruptly popped back up to where they had been.
“It really is like an inflated balloon right now. As we near new crop, the balloon will pop eventually,” said Seitz.
Once the new crop harvest starts, he said prices will likely fall.
In the meantime, new crop feed barley is still selling for as much as a 20-to-50 cent discount to old crop in some areas, although he added the discount shrinks to 15 cents to 20 cents in areas south of Calgary.
In addition to the dry conditions, he said strong export interest for new crop barley is also driving up prices.
“I think that has put a lot of buyers in a buying mood. They want to make sure they put their hands on a portion of it.”
Rob Durant, owner of Western Commodities Inc. in Tisdale, Sask., said old crop barley in his area is selling for about C$4.00 per bu.
“It had dropped. It looked like it was probably going to go down to C$3.75, C$3.50, but it’s definitely had a bit of a rebound, that’s for sure,” he said.
He said dry conditions are to blame, although his area and south have seen plenty of rain.
As well, he said a lot of farmers were holding onto their old crop, especially wheat, and some of that has recently started to move because many need to clear bin space for harvest.
“A lot of it has been very good quality. Even a No. 2. They’re just selling it to make room, or because no one had been looking for that kind of product,” Durant said.
He projected that other than the usual pressure that drives prices lower during harvest, feed wheat should carry good value throughout the winter.
However, he said many farmers will still need to sell off the combine.
“And honestly, even at C$3.75 or C$4 barley and C$5 to $5.50 feed wheat, picked up at the bin, it’s certainly not a terrible thing to move that and just not worry about it.”