The thermostat is stuck on high in Europe and Russia and that’s good news for Canadian barley growers.
A record heat wave, with temperatures in the high 30s celsius, has reduced crop prospects in western Europe and Russia.
At the same time, abundant rainfall has set back crops in eastern Europe.
All that will lead to a likely reduction in cereal grain production in that part of the world, which in turn is lending support to global prices.
“Barley stocks are definitely tightening up and it has been European stocks more than anything else that have weighed on the market the past year,” said Bob Cuthbert, in charge of barley sales for the Canadian Wheat Board.
Read Also
Canola council cuts field agronomy team
The Canola Council of Canada is cutting its agronomy team as part of a “refreshed strategic framework.”
Last week, Strategie Grains, a prominent French analyst, lowered its estimate for European barley output to 54.1 million tonnes, down by 1.5 million tonnes from the previous month’s estimate.
The new crop estimate is down 13 percent from last year.
“The reduction reflects reduced yield potential in southeastern Europe countries caused by rain at harvest time and the impact of excessively high temperatures in the northern and western EU countries,” Strategie Grains said.
The EU is holding sizable stocks of barley following last year’s bumper harvest, with 5.7 million tonnes held in intervention.
The European Commission, the EU’s executive arm, said it has no plans to sell intervention stocks until at least the end of this year’s harvest of summer crops when crop conditions can be more accurately assessed.
Cuthbert said a 30 percent drop in China’s expected barley output should provide sales opportunities and is another positive sign for barley prices. Canada’s barley acreage is down by 21 percent and production is expected to drop accordingly.
Cuthbert expressed some optimism about the prospects for the crop output, especially in the western Prairies, if the weather co-operates for the rest of the year.
“The potential is there for good yields and a pretty good quality crop, but we are going to need a replay of the warm, dry finish we’ve have the last two years,” he said.
“If we get that, we’ll have a decent crop but it will certainly be smaller.”
The CWB’s latest pool return outlook for designated barley is projecting a 2010-11 price of $204 a tonne for Select Canada Western two-row and $186 a tonne for six row (less deductions for freight and handling).
The final PROs for 2009-10 were $209 and $191 per tonne respectively.
