Feed barley prices appear set for a slight downturn in 1998-99, but that depends on U.S. corn prices, Asian coarse grain demand and how much is consumed by Canadian livestock, said Agriculture Canada in a year-end report.
“The big issue is ending stocks. The warm weather will impact feed usage so our ending stocks may be a little higher than our estimate,” said Fred Oleson, chief of Agriculture Canada’s market analysis division in Winnipeg.
The division estimates ending stocks on July 31, 1998 will be 2.6 million tonnes, down from 3.36 million at the same time in 1997 and 1.75 million in 1996.
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But the forecast could vary by five to 10 percent depending on domestic consumption, he said.
Based on this early ending stock estimate and the department’s expectation of world market conditions, it expects feed barley prices in 1998-99 will be down about $10 a tonne from this year’s range of $130-$150 a tonne before handling and transportation.
Several factors to consider
“Largely, that will depend on some weather issues and what happens to the U.S. corn market over the course of the next few months, especially the impact the Asian situation will have on coarse grain imports and soy meal.”
Oleson said the U.S. is offering agricultural credit to Asian countries for feed grains and he expects demand won’t fall significantly.
Another factor is ending stocks of American corn. The United States Department of Agriculture’s December estimate is 24.22 million tonnes of corn at the end of the 1997-98 crop year, up about 450,000 tonnes from the November estimate due to expectations of reduced exports.
Turning to oats, Oleson said Canadian stocks are expected to be tight at the end of the year. The big story this decade has been the slump in U.S. production and Canada’s ability to fill the needs of American millers and horse owners.
“U.S. import demand is still very strong and they aren’t getting much from the European Union.
“It doesn’t look like next year, or in the few next years, anything is going to happen on U.S. oat production so they should remain pretty tight for 1998-99,” he said.
One change in the next crop year will be increased exports of oats processed in Canada, thanks to expansion of the Can-Oat Milling plant at Portage la Prairie, Man., and construction of its oat groat plant at Saskatoon, Oleson added.
Oat prices
Agriculture Canada forecasts average oat prices in the next crop year to be steady with this year – $155-$175 a tonne before handling and transportation.
Stocks of rye are expected to be down to just 40,000 tonnes by July 31. Rye has enjoyed a good premium over barley this year and that might prompt producers to seed more acres to the crop this coming summer, he said. That would reduce the downward trend that has seen harvested area shrink to 382,000 acres in 1997 from 630,000 in 1987.
