The Canadian Wheat Board has bumped up the pool return outlook for feed barley by another $9 a tonne, the second significant increase in the past two weeks.
The PRO for No. 1 CW barley now stands at $156 a tonne, up from $125 a month ago and $147 Aug. 12, when the board took the unusual step of issuing a mid-month PRO.
The new PRO works out to an Alberta farmgate price of about $104 a tonne, or around $2.27 a bushel, a price that should prompt a lot of farmers to consider delivering to the board for the first time in several years.
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“It’s a very serious alternative and farmers should be looking at it,” said Paul Cassidy, grain market analyst with Mitcon Inc. of Calgary.
“There’s just not going to be enough domestic feed market demand for the amount of barley that’s out there.”
Board officials and private market analysts say farmers who want to get a piece of the buoyant world feed market should deliver early.
“We’re not sure how long this is going to last,” said CWB market analyst Peter Watts, adding there could be some downward pressure on prices as the year progresses. “It would be good to have deliveries early in the season rather than later so we can take advantage of the good market.”
Right now, the European Union has withdrawn from the market because of a reduced cereal crop resulting from this summer’s heat and drought.
As a result, big buyers like Saudi Arabia and other customers in the Middle East and North Africa, are looking to suppliers like Canada.
With the southern hemisphere crop still months away from harvest, Canada is the main supplier of barley for the world market.
“Right now we’re it,” said Cassidy. “We don’t have the other suppliers like Australia in the game yet. We will, come the new year.”
Early deliveries are crucial and farmers should be signing delivery contracts, he said. He expects basis levels to remain wide on feed grains.
In particular, barley growers in northern areas who face significant trucking costs to markets in heavy demand areas should take a serious look at a CWB contract.
Crop problems in Europe and Canada also contributed to a rise in world wheat and durum prices and higher PROs for all CWB grains.
In mid-August, the United States Department of Agriculture reduced its world wheat production forecast by 11 million tonnes to 549 million tonnes, the lowest since 1995. Recent rains have boosted crop prospects in Australia and Argentina, which could pressure prices later in the year.
For durum, the PROs are $7-$12 a tonne higher, reflecting the impact of smaller than expected crops in the EU and Canada, offset by reduced demand in North Africa.
Malting barley is up $7 a tonne, reflecting the EU crop as well as price support from strong feed grain markets.
