January 2 – Less is More When It Comes to Malt Barley Prices

The Canadian Grain Commission look at Western Canada’s 2017 malt barley crop certainly showcased a smaller production number.

Can you guess if acres or yields were to blame though?

And what does 2018 look like?

The Canadian Grain Commission look at Western Canada’s 2017 malt barley crop certainly showcased a smaller production number.

Can you guess if acres or yields were to blame though?

And what does 2018 look like?

What we do know is that there’s likely to be less acres of malt barley planted in 2018.

This is mainly because for malt barley bids under $5 CAD and barely above $3 USD per bushel are nowhere near attractive enough to make money on.

As a side note, Australian farmers are taking off a much smaller crop in 2017/18. Because of that and some decent domestic demand, Aussie barley prices are the best they’ve been in a few years.

Thus, you can bet that Australian barley acres will likely be higher in 2018/19, taking up some less profitable acres that were expected to go into pulses (that was, before India’s import tax policies).

In Western Canada and the US Northern Plains, barley is certainly losing acres to corn. This is especially true in places like North Dakota and Manitoba, where farmers are catching the corn fever.

The drier conditions in 2017, according to the CGC, did create some higher test weights though. Also, plumpness was above-average.

This all added up to a very strong malt barley crop in Western Canada (and part of the reason we haven’t seen any increase in bids).

Considering that the US malt barley growing regions saw relatively similar growing conditions, the American malt barley crop is also of decent quality. This has been confirmed to us by more than a few U.S malt barley buyers.

As such, they don’t need to pay up since there’s lots of good quality. The drawback, intuitively, is that acres will likely fall again in 2018.

Malting barley production down, quality up

Western Canada’s barley acres continue to fall, but the Canadian Grain Commission 
says there were some bright spots

There was less malt barley produced this year but what did come off looked good, according to the Canadian Grain Commission.

The organization’s 2017 Quality of Western Canadian Malting Barley report noted lower production, less acres and a yield decrease, but high kernel weights and plumpness across the Prairies.

Manitoba showed the highest production drop in the Prairies, with 19 per cent less barley taken off the field than last year, compared to a 10.2 per cent drop across Western Canada. Only 438,000 tonnes came off the field province-wide, compared to 540,000 in 2016. The CGC says that’s because of a decrease in yields as well as smaller-seeded acreage.

Only 265,000 acres of the cereal went in the ground this year in Manitoba (250,000 of which was harvested), compared to 360,000 last year and 400,000 the year before, according to Statistics Canada. According to the recent CGC harvest report, seeded acres were less than half the 2007-16 average. Across Western Canada, the 5.4 million acres planted in 2017 were about 23 per cent less than the 10-year average and less than 2016 by about 600,000 acres.

“We did see that barley acres were down this year in Manitoba and yields were, I think, definitely variable,” Pam de Rocquigny, general manager of the Manitoba Wheat and Barley Growers, said. “It was largely a function of moisture and whether producers got timely moisture or whether there was some lack of moisture throughout some areas of the province too.”

De Rocquigny blames the downward trend on pressure from the feed market. Some barley has been shifted out for corn, a crop that jumped almost 19 per cent with 401,000 acres seeded this year, or other crops like soybeans. Soybeans reached 2.3 million acres for the first time this year, while corn has been on an upwards trend since 2014, according to Statistics Canada.

David Van Deynze, MASC vice-president of insurance operations, says the decline in barley acres has been ongoing over the last several years.

“I’m of the mind that it’s likely a combination of a couple of things,” he said. “One is the economics of it for sure and there’s been a little bit of a struggle in the wetter years to grow good-quality barley. Fusarium hits barley fairly hard, generally speaking.”

That lower quality may exclude Manitoba barley from both malting and feed selection, he said.

De Rocquigny has also noted that challenge. Producers who have chosen to plant malt barley varieties have struggled to have their grain selected for malting.

That was not a problem this year. Manitoba broke its wet cycle in 2017, with most of the province reporting far drier conditions than normal.

There has been no word yet on whether those dry conditions led to more Manitoba barley being selected. The association has not seen selection data yet, de Rocquigny said, although she hopes the drier conditions may have led to bigger selection numbers, taking some of the sting out of the overall production drop.

While de Rocquigny pointed to variable yields in Manitoba, Van Deynze says MASC’s yield numbers are “as high as we’ve ever seen them.”

“I would say that Manitoba’s probably different from the rest of Western Canada,” he said.

Barley yield hit a five-year high provincially with an average 80.4 bushels per acre, according to Statistics Canada.

Yields down

Across the west, yield hit only 69.8 bushels an acre, according to the CGC, down from 73.9 bushels per acre in 2016.

The CGC blamed that drop on dry conditions. South-central Saskatchewan in particular was hit with drought this summer, although subsoil moisture saved many of those yields, it said.

“Overall, the dry growing season in 2017 resulted in ample supply of excellent malt-quality barley with slightly lower-than-average protein levels, and heavier and plumper kernels compared with the 10-year average values,” the CGC reported. “Barley exhibited very high germination energy and vigour with little evidence of water sensitivity.”

CDC Copeland and CDC Metcalf, two of the most common malting varieties, both dropped protein in barley selected for malting this year. Province-wide, CDC Copeland dropped to 10.3 per cent protein, down from 11.1 per cent in 2016. CDC Metcalf dropped one per cent to 11.1 per cent protein. Manitoba’s protein fell below the Prairie average, which sat at 11.3 per cent for CDC Copeland and 11.7 per cent for CDC Metcalf.

While that may have reflected drier growing conditions, de Rocquigny added high protein in barley isn’t a good thing for malting.

“For malt selection, you don’t want too high of protein anyways, so that’s a good thing, I think, at the end of the day,” she said.

Dry conditions did not stop a jump in kernel weight and plumpness. One thousand kernel weight for CDC Copeland was up 1.8 grams to 45.8 grams and plumpness was up 2.8 per cent, both near or exceeding the Prairie average. For CDC Metcalf, 1,000 kernel weight was up 1.3 grams to 44 grams and plumpness jumped to 92.7 per cent, up from 88.9. Both varieties met or exceeded the other Prairie provinces on intermediate grade.

“I think so far we’re seeing very good-quality barley, absolutely,” Van Deynze said, noting that MASC gathers data on barley in general, rather than splitting between malting and feed barley.

H/T: Manitoba Cooperator
About the Author
Brennan Turner

Brennan Turner is the CEO of FarmLead.com, North America’s Grain Marketplace. He holds a degree in economics from Yale University and spent time on Wall Street in commodity trade and analysis before starting FarmLead. In 2017, Brennan was named to Fast Company’s List of Most Creative People in Business and, in 2018, a Henry Crown Fellow. He is originally from Foam Lake, Saskatchewan where his family started farming the land nearly 100 years ago (and still do to this day!). Brennan's unique grain markets analysis can be found in everything from small-town print newspapers to large media outlets such as Bloomberg and Reuters.