INNISFAIL, Alta. – A bountiful harvest of corn in the United States bears the weight of good and bad news.
Record carryouts of corn, barley and wheat are shoving feed grain prices over the edge, say industry analysts. For livestock feeders, the ample grain supplies are a boon since feed is a major expense for these margin operators.
“It will be like this till at least spring,” said Errol Anderson of Pro-Market Communication in Calgary.
Another factor in low barley prices is the warm fall that has reduced feed demand.
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“We need a shot of really cold weather, about minus 20,” he said.
During cold snaps animals eat more and could chew their way through some of the mounds of grain available this fall.
Last week, southern Alberta barley delivered was $2.30 to $2.35 a bushel. If the warm weather holds, Anderson figures barley quotes could drop another dime.
Analysts expect the feed barley carryover will be higher than Agriculture Canada’s estimate of 2.5 million tonnes. Some say the stock pile will grow to 3.4 million tonnes.
The export market, served by the Canadian Wheat Board, offers no respite.
“The board has no rescue plan for barley,” said Anderson. “The board can’t flog it. They’re up against the world.”
Tonnes of barley
Another Calgary analyst believes the wheat board should try to sell more barley, but since so much is consumed domestically it is hard to find international bids that are competitive with local prices.
“There is a million tonnes of feed barley they could get,” said Paul Cassidy of Mitcon Inc., a marketing information company.
Adding to the glut are mountains of feed wheat. It is trading under barley at $1.80 a bu., but many feedlots avoid feed wheat because it can cause liver problems.
In addition to the overflow of wheat and barley, the American corn harvest is closing in on a record.
In its last report of the year, the United States Department of Agriculture updated its corn crop to 9.54 billion bushels. This is the third biggest crop on record despite the drought that hurt farmers in the east and parts of the midwest corn belt.
This harvest adds to U.S. carryover stocks of nearly two billion bushels from the 1998 crop year, said Cassidy.
About 81 million tonnes of coarse grains like corn, barley, sorghum and milo are traded internationally, with corn setting the benchmark price.
“It is easy to measure supply, but it is hard to predict demand.”
The competition among feed grains is tough because it is easy to substitute one for the other to make up the lowest cost ration.
