Barley prices pulled back from their monumental tear but remain relatively strong thanks to a couple factors.
First, stronger U.S. corn prices have helped lift the entire feed market in Canada.
Second, those willing to sell old crop barley – be it feed or malt quality – into the feed markets is becoming a bit more difficult for buyers.
Third, export competition for that same old crop competition remains relatively robust.
That being said, we know that rail movement in Western Canada hasn’t been all that great and we asked the question this week if barley prices could even go higher with better rail movement. Since there are lots of comparisons to 2013/14, that’s what we used for comparison.
Canadian Grain Commission (CGC)’s data on the weekly grain movement updated to March 11 shows that Canadian barley exports continue to be strong. Specifically, 1.24 million tonnes have been shipped out thus far, basically double the 624,000 tonnes exported by this time a year ago.
Barley exports are up to 4.2 million metric tonnes, but their stocks are low and their prices are high, at $212.25 USD / metric tonne (or $4.62 USD and $6.05 CAD per bushel). Normally, feed barley prices run under that of Russian 12.5% wheat, but at these prices, they are trading at a premium.
If we look at the data about where the barley is going, both Japan and China have been buying double what they were a year ago. To be more precise, through the end of January 2018, China had imported 820,000 tonnes of Canadian barley, compared to 411,000 tonnes at the same point a year prior. Japan had accounted for 62,400 tonnes, more than double the 26,600 tonnes at the same point the year before.
Ultimately, there are lots of good feed barley prices out there right now and we continue to be cognizant of more downside risk than upside potential at this time. This is due mainly due to cyclical factors (as depicted in the chart), substitution effects (corn and wheat being used instead of barley), and feed barley buyers having coverage of feedstuff needs into the summer months.
Malt barley prices have been the opposite, with buyers basically saying, “don’t sell to me” with bids sitting around $4.25 – $4.50 CAD per bushel in Western Canada and below $3 USD / bushel in the US Northern Plains.New crop 2018/19 malt barley bids are sitting around $4.75 – $5 CAD per bushel in Western Canada and basically $3 USD per bushel for US growers.
As a reminder, for 2017/18 old crop, we now sit at 90% sold on feed barley and remain at 40% sold on malt barley. For 2018/19 new crop, we now sit at 20% sold on feed barley and remain at 0% sold on malt barley.
We tend to think that if you’re able to ensure a profit on a new crop malt barley bid of $5, we’re not opposed to looking into contracting that. Just keep in mind that malters seem pretty content with their position and are definitely not going to be the first move in the “who blinks first” game.
Have a great week!
– Brennan, Garrett, and Adrian
March 14 – With Slow Rail Movement, How Far Are We From The Top of The Barley Market?
March 12 – Canadian Cattle Herd Not Getting Bigger
March 12 – What Will Feed Barley Prices Do From Here on Out?
March 11 – Barley Weekly GrainCents Digest
March 9 – GrainCents Crop Sales Position Update
March 9 – Better Prices Means Bigger Acres for Australian Barley
March 7 – Aussie Feed Barley Prices Now Bigger Than Malt Barley
March 4 – Barley Weekly GrainCents Digest
March 1 – GrainCents Crop Sales Position Update
March 1 – Grain Rail Shipments on the Rebound? Not in 2018
February 26 – Why the Recent Rally in Feed Barley Prices?