Today’s dryness on the western Prairies is making tomorrow’s barley and durum prices look a lot better, analysts say.
Barley prices have already broken their normal seasonal pattern to rise back to spring levels, and durum should reflect likely tight new crop supplies.
“It’s created an unexpected de-mand for barley,” Errol Anderson of the Pro Market Wire newsletter said about farmers who are moving cows and yearlings early because their pastures are suffering.
“Lethbridge (barley) has moved back into that $218 to $220 range.”
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Canada is only a small player in many world crops and is unable to independently move markets, such as wheat, very far.
However, the markets that Canada dominates could see a real impact, especially if they are coping with already-low stocks. That includes barley, both for feed and malting, as well as durum, peas and lentils.
“I think we’re past the declines in durum and we’re starting to turn higher again,” said Chuck Penner of LeftField Commodity Research.
“We have no carryover.”
Anderson said cow and yearling prices have been falling in Alberta as farmers deal with stunted crops and dry pastures by selling cows. Feedlots have seen more animals than they expected to be buying, so they aren’t willing to bid up prices.
At the same time, they are anxious about using up the barley stored in their bins and are trying to buy up old and new crop supplies in case the situation becomes really tight in the new crop year.
“The prices have gotten so high that now some state-side corn byproducts are being shipped into southern Alberta,” said Anderson.
An interesting situation is canola.Canada is the world’s largest exporter, but acreage is spread across the Prairies.
New crop stocks are already ex-pected to be tight, and the dry situation could be worse than just reduced yields, especially if farmers backed out of canola acres recently.
“There were about a million acres of canola reseeded (according to reports),” said John Duvenaud, publisher of the Wild Oats newsletter.
However, farmers he has spoken to tended to switch to other crops if conditions looked terrible.
“They were reseeding, but they weren’t reseeding to canola,” said Duvenaud.
“There was just no moisture at seeding depth, so they’re putting some sort of cereal in instead.”
