WINNIPEG – Barley production will increase but world supplies will decline, leaving world markets firm in 1995-96, said a Canadian Wheat Board official.
Robert Cuthbert, marketing manager for barley, spoke to economists, analysts and farmers at Grain World 1995 held here last week.
Cuthbert forecasts Canadian production next year at 12.2 million tonnes, an increase due to better malt prices and rotational constraints of canola.
He said he expects Australia to return to production of about 5.3 million tonnes next year, but added “that’s a pretty big if. After the horrendous conditions they’ve gone through, you would expect some carry-over of problems.”
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Cuthbert said European yields will likely return to former levels, and countries will produce more because of reductions in set-aside programs. He said U.S. producers will continue to plant historically few acres.
Despite production, Cuthbert forecasted Canada, Australia, the U.S. and Europe would see a decline in total supplies of about two million tonnes because of tight stocks. Any production problems would then affect prices.
Selected for malting
Cuthbert said a record percentage of 2.5 million tonnes of Canadian barley out of 11.7 million tonnes produced will be selected for malting barley this year.
Meanwhile, he said if more malting barley was available, China might have imported more than the forecasted one million tonnes this year because of more beer consumption in the country. He said China’s imports will increase next year.
Malting barley prices could drop from current peaks if Australia’s crop pulls through, but will remain at a high premium compared to feed barley.
More Canadian cattle rations contained barley this year since the U.S. continued to import feed barley until new corn crops became available.
He said world barley stocks are shrinking as Australia, Canada, the E.U. and the U.S. are expecting ending stocks of 10 million tonnes, which is 38 percent lower than stocks at the beginning of the year. He said these lows will continue into next year.
Because of reduced supplies and strong demand, world prices have increased steeply during the past few months. Cuthbert said feed barley prices will remain stable: f.o.b. at U.S. Pacific Northwest points for number two barley should be around $115 (U.S.) per tonne until fall.
Malting barley should enjoy continued high prices through the summer because of tight demand and the Australian drought.
Since July 1994, Canadian west coast two-row barley has risen from less than $100 (U.S.) per tonne f.o.b. to more than $180 (U.S.) per tonne.
Cuthbert said U.S. export subsidies will likely continue to be a disturbing factor this year in the feed and malting barley markets, even though supply and demand is tight.
