CAMROSE, Alta. – The rising price of barley may have barley growers smiling, but it has feedlot operators sharpening their pencils.
The cash price of barley around central Alberta this week is about $130 a tonne ($2.83 per bushel) compared to $94 per tonne ($2.04 per bushel) at the same time last year.
“When the price of barley goes up, we try and buy our feeder cattle cheaper,” said Mike Kotelko, a partner with his brother Bernie in Highland Feeders.
“The first thing we can influence is the price of cattle,” he said.
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Depending on the type of feedlot, barley can account for two-thirds of the cost of finishing cattle.
Last year, the brothers fed about 2.5 million bushels (60,000 tonnes) of barley at their Vegreville feedlot.
To help protect them from fluctuating prices they use the futures market to lock in a price for barley. Although they have some locked in at a cheaper price, they now wish they’d locked in more.
Ron Gietz, livestock analyst with Alberta Agriculture in Edmonton, said with every 10 cents a bushel increase in the price of barley there will be a one cent a pound decrease in the price of feeder cattle.
“The producers that are really hurting are the ones with cattle in the feedlot as the price of barley is going up,” he said.
“If you have the barley stocks secured then you have a good idea of costs.”
One of the biggest factors influencing the price of barley is the expected lower-than-normal American corn crop.
“So goes the U.S., so goes the world,” said Al Dooley, an Alberta Agriculture market analyst.
Hans Visser, general manager of Sandy Hill Stock Farms at Taber, Alta., said although they will “tune-up” their rations, he’s not complaining too loudly about the price of grain.
Grain farmers’ turn
“I feel the cow/calf people, they’ve had their turn at it. It’s now the turn of the grain producers. Three dollars a bushel is not unreasonable,” said Visser.
“The feedlot industry was spoiled. They had some pretty golden years.”
Wayne Forbes of Jubilee Feedlot in Westlock, Alta., said he will also be looking at buying cattle cheaper than last year and lock in barley at a set price.
“It’s tough to get excited about buying a big bunch of barley ahead of time,” said Forbes.
Last year Jubilee locked in about one-third of its barley. Another key to surviving higher feed prices is to make rations cheaper by reducing the percentage of barley in the finishing ration, he said.
The feedlot is also looking at buying more British breeds that Forbes said take less feed to finish.
