January 7, 2013

Canada's declining wheat, corn prices to affect barley

Over the last half of December, the declining feed wheat and corn prices in Canada may also pull barley's prices down as well.

Kyle Sinclair noted barley has so far held relatively firm in the key Lethbridge livestock feeding area, despite the losses in other grains.

Barley is more likely to go down, than for everything else to go back up, said Sinclair, a broker with Agfinity at Spruce Grove, Alta. "The overall sentiment would be fairly bearish."

Farmers are not tight on cash flow and are not willing sellers, which may be helping prop up the barley market, he said. However, he added, buyers are also covered through February.

Feed wheat typically trades at a US$6-7 per tonne premium over barley, but Sinclair said the two crops were currently trading at similar levels in the US$275-280 area into Lethbridge. While wheat was looking a little oversold, he said there was more room for barley to go down than for wheat to rise.

The barley market has held in a narrow range for some time, he said, and whether it breaks higher or lower will determine the trend into the spring.