For producers who have held onto their feed barley into the spring, now is the time to move it to feedlot alley, marketers say.
Right now.
Prices have surged but could crash in just days or weeks.
“The market could easily drop 50 cents (per bushel) in the next two months,” said Kyle Sinclair, a broker with Agfinity in Spruce Grove, Alta.
“The thought that bids are going to decline (very soon) is fairly consistent between the buyers.”
Delivered feed barley prices around Lethbridge have shot up since the beginning of May from about $4.30 per bu. to $4.56 May 15, Sinclair said.
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Jim Beusekom of Market Place Commodities in Lethbridge was finding the same price from feedlots for delivered feed barley.
Prices surged after southern Alberta was blanketed by a layer of snow and truckers and farmers found they couldn’t move the grain to Leth-bridge that they had booked to deliver.
Farmers now are too busy to make extra sales to make up the deficit and truckers have other products to haul. That’s driven the rally, which could help farmers with cash flow problems.
“That (increase of more than 20 cents per bu. since the beginning of May) makes a big difference if you’ve been taking a beating all winter,” said Sinclair.
Beusekom said it makes no sense for farmers to hold onto feed barley any longer, even if they’re busy seeding, because these prices won’t last once seeding and spraying are complete.
“You can guess what’s going to happen in July when they all want to sell it: it’s going to drop like a rock,” said Beusekom.
Sinclair doubts the good bids for June will last. On May 15, June bids were almost identical to the remaining May bids, but those high bids will be there only until Lethbridge feeders believe they have enough coverage.
“Get that nice June price (now) because once we’re done seeding and freight is easier to find,” June bids will probably drop to July levels, Sinclair said.
“The July number is anywhere from 30 to 40 cents a bushel less than we’re seeing for June.”
Beusekom said he has never seen feeders squeezed so hard.
“This is probably the most extreme situation I’ve ever seen,” said Beuse-kom, noting the near impossibility of finding truckers because of increased demand for trucks to haul fertilizer, other grain sales from farms and crop transfers between elevators.
Sinclair said farmers with feed oats should also move them quickly, even though he is bullish on milling oats. The two types of oats are in starkly different markets this year.
“(Feed oats) are competing with other feeds,” said Sinclair.
“If barley goes down, it’s going to be really hard for feed oats to climb even if milling oats climb.”
Sinclair is more relaxed about feed wheat, which has lost $6 to $7 per tonne in relative value compared to feed barley.
“That should come back,” he said.
“I would just move what you need for cash flow and bin space. I don’t think I’d get too aggressive selling all of it.”
Sinclair said feeders appear to be evaluating their barley needs every week, which means they will back away once they believe they have enough to make it through June.
“Every weekend, buyers are assessing their positions and deciding how aggressive they’re going to be for the next week,” said Sinclair.
Beusekom said Lethbridge feedlots tend to not have the storage to hold many weeks of supply.
“Most feed users don’t carry a lot of inventory at the feed mill or the feedlot. Seven to 14 days is probably it.”
