Profit calculators assessing net returns from crops planted this spring put feed barley at the bottom of the list and malting barley about halfway up.
That’s the major reason the Canadian Wheat Board expects barley acres to climb only a little.
“An increase in the (Pool Return Outlook) should help . . . but we have found the return on feed barley, if you’re not going to get malt or there’s a risk of not getting malt, is one of the lower returns of all commodities,” said CWB barley marketing and sales manager Lorelle Selinger at the board’s GrainWorld conference.
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The CWB forecasts an 8.5 million tonne Canadian barley crop, up from 2010’s weather-plagued 7.6 million tonnes but still less than the five year average of 9.9 million tonnes.
The 2011-12 PRO for select two-row malting barley is $337 per tonne at port compared to the current 2010- 11 PRO of $253 and six-row is $320, up from $236.
But the feed barley PRO has edged up only to $257 per tonne in 2011-12 from $234 in the current crop year.
Even if malting PROs are much stronger, that low feed PRO will likely discourage barley seeding, said Errol Anderson of Pro Market Communications.
“I don’t think it’ll shift acres,” said Anderson.
“Certainly it’s much better news, but I think the push is going to be on canola.”
The profitability numbers Selinger showed during her presentation, estimated by Saskatchewan Agriculture, put durum and canola at the top of the profitability scale, malting barley and spring wheat in the middle and feed barley at the bottom.
Mike Krueger of The Money Farm in Fargo, N.D., believes few American farmers will increase feed barley area because it looks less profitable than other crops.
“If they try to raise barley they will do it under malting contracts,” said Krueger.
“My sense is that (malting) barley people want to get more acres,” said Krueger about buyers for the brewing industry.
“I don’t think there has been as big a response to their contracts as they would like.”
Barley prices have sagged, according to the U.S. Department of Agriculture.
In 2008-09, the average farmgate price was $5.37 per bushel for barley. In 2009-10 it was $4.66 and in 2010- 11, USDA predicts $3.80 to $4 per bu.
Krueger said if forecasts for a delayed spring seeding season come true, it will discourage barley seeding because farmers in his area have better short-season crops.
“The later we are, the more it will hurt barley,” said Krueger.
The opposite is true in Canada. Barley is one of the better choices in a late spring.
“That could … put some acres in the ground where they have lost their window to put in other crops,” said Selinger.
Overall, the outlook for barley prices is bullish.
Global feedgrain stocks are low, malting barley buyers are “running on fumes,” world use of barley in 2011-12 will likely once more surpass barley production and world barley stocks will continue to decline.
In 2009-10, the world ending stocks of barley were over 40 million tonnes, but that is expected to fall to about 30.4 million tonnes in 2010-11 and will likely fall to 27.4 million tonnes bythe end of 2011-12, Selinger said.
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