Farmers planting malting barley this spring know that rain can be a blessing and a curse.
Unless they get rain at the right time, especially during this dry spring, the chances of barley being selected for malt become slimmer.
But a general rain at the right time could also throw a wet blanket on market prospects for the crop.
Right now, malting barley markets look soft, said Jim Venn, executive vice-president and chief operating officer at Dominion Malting Ltd.
“But it’s still very much a weather-related market,” said Venn.
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One farmer feels smoke from nearby wildfires shrouded the July skies and protected his crop from the sun’s burning rays, resulting in more seeds per pod and more pods per plant.
Dry weather stresses malting barley and increases protein levels, decreasing its quality for malt. That could push prices higher.
“It’s always difficult at this particular time of year to measure what’s going to happen and of course it’s much too early to understand what the weather impact is going to be,” he said.
Charlie Pearson, analyst at Growers’ Marketing Services, said malting barley prices are at a “more normal” level than the strong prices seen in the past few years.
“To me, malt barley is probably one of the things where we’ll see prices improve during the year,” said Pearson, forecasting farmers may see payments in the top third of the Canadian Wheat Board’s pool return outlook.
Even at low forecast prices, the extra returns farmers can get from malt barley make the crop one of the “better payers” this year, said Pearson.
In its most recent outlook, the wheat board forecasted returns for 1998-99 of $157 to $187 per tonne for two-row malting barley and $142 to $172 per tonne for six-row, less freight.
CWB market analyst Peter Watts explained world trade in malting barley has fallen about 10 percent during 1997-98, partly because of a drop in Chinese demand.
The “credit crunch” in Asian markets has also contributed to the slight dip in demand, he said.
And the European Union has applied a whopping $70 per tonne subsidy to recent malting barley sales into Colombia and Mexico.
Prices down
While Watts expects world demand for malting barley to recover next year, price prospects have been weighed down by what has been happening in coarse grain markets.
Saudi Arabia bought less feed barley this year. Asian countries bought less corn. The record world wheat crop made wheat more affordable to feed to livestock, providing competition for corn.
“All those factors have combined to pressure prices,” said Watts.
He noted U.S. growers are planning another large corn crop this year.
The European Union and Australia are Canada’s two main competitors in the malting barley market, said Watts. The three countries account for 80 percent of world trade in the crop.
Most of the world’s crop is not yet in the ground. But farmers in all three regions are expected to plant less because of poorer prices, he said.
Overall, malting barley supplies are relatively tight, said Watts.
“This could lead to a rapid turnaround in prices if there were a problem with production in one area or another.”
Already, European new-crop malting barley prices are about $10 (U.S.) more than old-crop bids.
“There is some positive news in the forward months right now already,” said Watts.
