Farmers can probably count on a spring barley rally, some marketers say.
However, they had better watch closely because it might not be as big or predictable as it usually is.
“It’s one of the most consistent things in our market cycle,” said Kyle Sinclair of CorNine Commodities in Lacombe, Alta.
“It’s fairly safe for a farmer to assume an up-trending price going into the spring.”
Feedgrain prices usually rise in Western Canada in May and June. Most believe this is because of road bans and seeding preparations, which discourage farmers and truckers from delivering grain.
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Less grain delivered to feedlots and other feedgrain users forces buyers to bid more aggressively to secure supplies, which causes the rally.
Farmers may still have ample barley in their bins this year, but that doesn’t mean a spring rally won’t happen, said Jim Beusekom of Market Place Commodities in Lethbridge.
Spring not only brings logistical challenges for delivery but also causes buyers to worry that a late or dry spring may affect future supplies.
“When we get to the end of February, we’re at the start of another weather market,” said Beusekom.
There’s little reason right now for feedgrains to rally substantially. Agriculture Canada expects barley ending stocks to increase to 1.7 million tonnes, which is higher than the five year average.
However, memories of the drought on the western Plains last summer could inspire enough fear to propel a rally, Sinclair said. The market could rally if it remains dry and drought fears continue.
“Waiting four to six weeks here could be valuable,” Sinclair said about when farmers should consider selling.
Barley prices have suffered as wheat weakened over the winter.
Feed barley is selling for $200 to $210 per tonne in Lethbridge, Beu-sekom said, compared to $215 to $225 per tonne for feed wheat. The cheaper end of the feed wheat range is for fusarium-tainted crops.
Sinclair said farmers can’t assume a rally this year will happen in May and June, as it usually does.
Last year, the rally rose early because of an early spring. Prices fell off after seeding began, rallying again only when drought threatened.
Drought worries could surface early this year but also end early, and prices could settle back.
