December 11, 2008
While feed barley prices in western Canada continue to weaken and have more room to the downside, international prices are considerably lower, which should keep Canada out of the export market going forward.
Spot feed barley bids in the key Lethbridge, Alberta, market are currently sitting around C$155 per tonne, which compares with prices near C$190 per tonne a month ago, according to provincial data from the Alberta Grain Commission.
While domestic barley prices have dropped, Neil Slingerland, president of Newco Commodities Ltd. in Alberta, thought domestic barley prices would need to drop another C$30 to C$40 per tonne before they were in the export range.
"The domestic market is still substantially stronger than the export market, which means we will have a very, very small export program," said Lorelle Selinger, barley marketing manager with the Canadian Wheat Board. She said larger production in Europe and the Black Sea region will keep export prices low. In addition, late rains in Australia have caused some downgrading in their malt barley crop, which will mean more feed barley than originally anticipated, said Selinger.
Canada had a large barley crop itself in 2008, and domestic prices are pointed lower as well, according to both Slingerland and Selinger.
Canada produced 11.781 million tonnes of barley in 2008, according to the latest Statistics Canada data, up from 10.984 million tonnes the previous year. Of that total, an estimated 4 million tonnes could be selectable as malt barley, said Selinger, although the actual malt barley program is unlikely to be that large.
Selinger said the large Canadian barley supplies will allow the maltsters to be pickier when it comes to quality. She expected farmer deliveries into the domestic feed market would pick up as they realize that it may be harder to achieve malt quality this year.
Slingerland said a lack of demand from the Alberta cattle feeding sector was also weighing on domestic prices. He said mild weather conditions this winter have reduced some of the feed demand, with many feedlots likely covered until February "before the barley they've already purchased is eaten up." He added that the cattle were also gaining weight faster than normal due to the milder temperatures.
While Canadian feed barley is unlikely to find a home in the lower priced international markets this year, Slingerland pointed out that domestic prices still make feeding barley more cost effective than bringing in US corn. He said corn was landing into the Lethbridge area at about C$200 per tonne, more than C$40 per tonne above barley.