July 22 – Barley Exports, Prices in a Corn-Heavy World

Grain markets are mixed today with as Chinese buying of corn and barley exports continues, but bearish weather is keeping a lid on things.

 “Procrastination is one of the most common and deadliest of diseases and its toll on success and happiness is heavy.”  – Wayne Gretzky (NHL Hall of Famer)

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Barley Exports, Prices in a Corn-Heavy World

Grain markets are mixed today with as Chinese buying of corn and barley exports continues, but bearish weather is keeping a lid on things. More specifically, in the past 12 days, China has bought about 3.26 MMT of U.S. corn (or about 128.3M bushels if converting metric tonnes to bushels). Just a heads up that, with a late start today, today’s Breakfast Brief is a little shorter than usual!

However, weighing on corn prices is decent crop ratings as 69% of the crop is considered to be in good-to-excellent (G/E) shape, unchanged on the week. The growing-friendly weather in the Midwest also boosted soybeans’ G/E rating by 1 point to 69% as well. Commerzbank isn’t buying it though as their data suggests that not only does the U.S. corn crop look worse than last year, it is also much worse than where the crop was in June due to the stress. [1]

Looking outside the grain markets, tensions between the U.S. and China continue to flare as the former, this morning, ordered the closure of China’s consulate in Houston, TX within the next 72 hours. [2] We should surely expect some retaliation from China very soon.

Sidenote: we’re currently exploring how you recommend to others, certain products/tools used by your farm or agribusiness. Why do you do it? How do you do it? If you’re willing to share some of your thoughts (3-5 mins max), then you’ll be eligible to win a $100 gift card for a business of your choosing – perhaps a local business that both you and we would like to support? Thanks in advance for your help and feedback!

Barley Exports Turn for Musical Chairs

In 2019, it was soybeans. In late spring, it was wheat. As we flip the crop year calendar over to the 2020/21 season, it looks like barley exports will be the next agricultural commodity to experience a game of musical chairs, in that buyers and sellers are trying to find out where to sit. More specifically, China’s decision to implement an 80.5% of tariff on Australian barley exports has put the barley exports market in a tizzy. It’s likely that U.S., Argentine, and Canadian barley exports should fill the gap of about 5 MMT or so that usually comes from Australia. [3]

That said, with 3 weeks left to go in the 2019/20 crop year, Canadian barley exports are now tracking just 3% behind a last year’s pace with nearly 2.05 MMT sailed. This is a huge improvement over the seasonal average, and again, China is largely responsibly for the increase. It also helps that railroads are open and grain movement is largely unobstructed these days!

Canadian 2019/20 cumulative barley exports through Week 49

Looking forward, in last Friday’s data dump from the AAFC, the government agency said that between malt and barley exports, total shipments for the 2019/20 crop year should equal 2.8 MMT, and 2.9 MMT in 2020/21. This is a 100,000 MT increase for both crop years from AAFC’s previous estimates. Could the number go higher as China buys more Canadian barley exports? Maybe a little but, as Australia moves its barley exports to destinations other than China, this means displacing Canadian barley exports that have traditionally gone to these markets (hence the musical chairs reference). Also worth noting is that Australian barley production is expected to climb nearly 10% this year to 9.8 MMT, according to the USDA attaché there. [4] This is partially why AAFC sees Canadian barley carryout for 2020/21 at 1.9 MMT, or nearly 30% above the five-year average.

July 2020 estimate of Canadian barley prices, ending stocks by AAFC

One last note: as I mentioned in early June, malt barley demand has dropped off significantly, and thus, malt barley prices are at multi-year lows. Conversely, feed barley prices continue to be resilient as with meat prices elevated due to COVID-19, it seems like there’s a few more dollars to maybe go around? The other factor to consider though is the availability of new crop supplies that should be hitting the market in Alberta’s feedlot alley in a few weeks. [5]

Alberta feed barley prices through July 20, 2020

Something that I’m keeping in mind (and so should you) is that barley acres in Alberta are the highest they’ve been since 2013, while Saskatchewan acres are near the 2010 record level. Put bluntly, with less malt barley demand, there’s going to be plenty of barley to go around in 2020/21.

Accordingly, if you have ANYTHING – feed barley, feed wheat, feed oats, damaged canola, etc. – left in the bin, I would List it immediately on Combyne. With 100s of credit-verified buyers looking for feedstuffs on Combyne today, by Listing your grain, you’re not only going to ensure you’re getting a great deal, but you will also be growing your trading network by adding a few new Combyne Connections. Remember: the bigger your trading network, the more deals you will be in the know of.

To growth,

Brennan Turner
TF: 1-855-332-7653
@Combyne or @FarmLead on Twitter

Due to a late start this morning, there’s no futures data included in today’s Breakfast Brief, but you can review them here at your convenience.

COMMODITY TRADING INVOLVES RISK AND MAY NOT BE SUITABLE FOR ALL RECIPIENTS OF THIS POST. Neither the information presented, nor any opinions expressed, constitutes a solicitation for the purchase or sale of any commodities. The thoughts expressed in this email and basic data from which they are derived are believed to be reliable, but cannot be guaranteed due to uncertainty about future events and complexities surrounding commodity markets. Those acting on the information are responsible for their own actions.

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