A lot of barley growers who harvested a good quality crop this year may be in for a big disappointment.
Barley that they might expect to be selected for malting may well end up outside of the maltsters’ doors looking in.
Bob Cuthbert, Canadian Wheat Board senior marketing manager for barley, said the quality 2008 barley crop of 11.2 million tonnes has created a good news-bad news scenario for farmers.
“There is a potentially high selection rate but there isn’t enough demand for all that barley,” he said.
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“Unfortunately, some farmers may have barley that most other years may have been selected but won’t be this year.”
As malting barley merchant Rod Green of Central Ag Marketing Ltd. put it: “the maltsters can be a lot pickier this year.”
Market analyst Greg Kostal said he’s encountering frustration among barley growers.
“People grow a high quality crop and see the pool return outlook, but then if you can’t get it selected, that ramps up the frustration,” he said.
The current PRO, basis Saskatchewan, is $257 a tonne ($5.60 a bushel) for Select CW two-row barley and $237 ($5.16) for six row.
The PRO for feed barley, Pool A, is $121 a tonne ($2.63 a bu.) basis Saskatchewan.
Meanwhile, domestic feed barley was trading last week at Lethbridge around $3.50 a bu.
Cuthbert said the world malting barley market will be extremely competitive in the coming year.
Not only did Canada have a big, quality crop, but so did Western Europe. Australia has seen its malting barley prospects decline in recent months due to drought.
Meanwhile, a large feed quality crop in Russia and Ukraine has led to a collapse in feed barley prices.
Total world barley production is up by about 12 percent, while world trade in malting barley is expected to be around 4.2 million tonnes.
“Some are saying we have that amount potentially selectable in Canada alone,” said Cuthbert.
The world price of malting barley has plunged since summer, but the PRO is still relatively good thanks to some early sales, he said.
While low ocean freight and a low dollar are positives for overseas grain sales, the global economic downturn is slowing demand, tightening credit and pressuring prices. As a result, the board doesn’t want to sell lower priced malting barley and dilute the pool.
Cuthbert expects a sales program of about 2.5 million tonnes in 2008-09, about the same as last year.
Kostal’s advice to producers with quality barley is to keep it in good condition and keep submitting samples in the event the CWB makes more sales.
If their barley is borderline, they’ll have to make a judgment call.
“Do you move it as feed now, before it goes down further, which I think it will, or do you keep it in good condition and aim for the 2009 pool? That may be better than dumping it for feed.”
