Fading feed prices have helped domestic maltsters pry barley out of farmers’ hands.
Those prices and a special program have lightened, but not eliminated, a critical situation for the maltsters, says the Canadian Wheat Board.
While domestic maltsters are still short of barley and some European barley is coming in to meet Canadian and American demand, the domestic supply is not as short as feared at harvest.
“I think some farmers decided to wait and see what happened to the (Pool Return Outlook) and the feed market,” said Bob Cuthbert, a CWB malt barley trader.
Read Also
Vegetable oil stocks are expected to tighten this year
Global vegetable oil stocks are forecast to tighten in the 2025-26 crop year, this should bode well for canola demand.
“A month or two later, many have come forward.”
At harvest, feed barley prices soared as livestock feeders scrambled to secure winter supplies. The spread between feed barley and malt barley narrowed – in some places cash feed prices were higher than the PRO for malt barley – and maltsters worried. They put together a program with the CWB in which farmers would be paid 95 percent of the malt barley PRO.
“That brought in significant tonnage,” said Cuthbert.
The steady downward trend in prairie barley prices has surprised many farmers, said Ken Ball of Benson Quinn-GMS. But this year follows the typical pattern of short crop years, in which high prices are set soon after harvest and then tail off.
“People don’t realize how fast the markets rally to discount and ration the situation,” said Ball.
“The prices go up. They get the rationing job done early. They force the corn into the system. The demand for barley fades. The farmers who held on too long sell as the price slides, and you get a downward sliding market.”
Ball thinks barley prices could drop by $5-$10 per tonne before new demand is created.
“The total supply of feed grains has proven to be quite adequate,” said Ball.
Many large Alberta feedlots moved corn into their rations last winter because of the poor 2001 harvest. This year they bought corn quickly again. Most now have ample supplies and don’t need to buy feed immediately.
“They’ve been on corn for more than a year now,” said Ball.
“Once they’re on corn, and they have their supply secured and booked forward, then their demand for barley drops very sharply.”
While prices have fallen, they are still good compared to historic average prices. Farmers have gotten used to high barley prices on the Prairies the last two years, but these won’t last.
“If we get good crops next summer, all of these prices will drop 20-30 percent,” said Ball.
Cuthbert said there is more prairie barley available than many expected because people had unrealistic price expectations.
“I think some farmers thought feed prices would go to the moon,” said Cuthbert.
“They had $5-a-bushel dreams.”
