Entering the 2017 calendar year, feed barley prices and malt barley prices continued to be range-bound.
In the FarmLead 2017 grain markets, we were expecting more of the same.
Going into the new year feed prices had trended down from their highs in early 2016 as the market was flooded with supply.
The same could easily be said for malt barley as decent quality and size crops were seen in many countries in 2016/17.
Early 2017 Barley Price Challenges
In the feed market, there was a lot of supply available, mainly thanks to the influx of non-milling wheat quality. More specifically, Ag Canada stated that 5.63 million tonnes of wheat went into the feed, waste, and dockage column for the 2016/17 crop.
That’s nearly 40% higher than the year prior,
And they year prior, in 2016/17, we saw some great feed prices!
Thus feed barley prices pulled back and didn’t move until the summer time (more on that later).
For malt barley, prices were pretty disappointing in early 2017. Malt buyers were picking and choosing which bins to buy. Stories ran rampant of malt barley that was rejected in the fall all of the sudden making grades.
Further, the 2016/17 Canadian barley crop was by no means very small at nearly 8.8 million tonnes with about 40% of that meeting malt requirements.
However, we did see a tick up in demand in February which saw a lot of $6 – $6.50 CAD/bushel handles trading on the FarmLead Marketplace for Metcalfe varieties.
Also, compounding things was a record 2016/17 Australian barley crop of 13.4 million tonnes. That flooded the international market, especially those in Asia. More specifically, Australia exported nearly 9.5 million tonnes of barley in the 2016/17 crop year.
That was a 54% climb from the five-year average.
For perspective, Australia grew less than 9 million tonnes of barley the year before.
Aussie feed barley exports in 2016/17 nearly hit 6.1 million tonnes while malt barley exports touched 2.7 million tonnes. That’s up 68% and 51% of the five-year average, respectively.
So Canadian barley exports weren’t by any means, amazing, at just 2.3 million tonnes. Especially for feed, since Australia owned the market.
Lower Barley Acres, Production Everywhere in 2017
According to the USDA, global barley harvested acres for the 2017/18 crop year were pegged at just under 118 million. That was down a little more than 1% from the 2016/17 crop year and 3% from the five-year average.
The biggest declines in harvested acres year-over-year were seen in:
• United States: -24% to 1.95 million acres;
• Argentina: -16% to 1.61 million acres;
• Ukraine: -13% to 6.55 million acres;
• Canada: -5% to 5.22 million acres; and
• Australia: -3% to 9.7 million acres.
These countries represent 5 of the top 9 barley exporters in the world. And with some less-than-ideal growing conditions, this is what happened to their production year-over-year:
• United States: -29% to 3.09 million tonnes;
• Argentina: -17% to 2.75 million tonnes;
• Ukraine: -12% to 8.7 million tonnes;
• Canada: -10% to 7.9 million tonnes; and
• Australia: -40% to 8 million tonnes.
The USDA is currently estimating that 2017/18 global barley production will be about 4% – or 6 million tonnes – less than 2016/17.
This has helped feed barley prices, but not so much malt barley prices. In November, we looked what was in the beer of North American barley complex. In that FarmLead Insights posts, we specifically recommended to lock in a feed barley sale, a call that’s turned out to be profitable as feed barley prices have dipped a bit since then.
Regardless, strong livestock prices are helping to keep feed prices elevated. However, substitution effects will be going on in feed barley, namely with corn (as outlined in detail in GrainCents)
Also, with less competition from Australia because of their smaller crop, Canadian barley exports are exploding out of ports. At 725,000 tonnes shipped out thus far, that’s 92% stronger than the pace seen a year ago. As such, we have a feeling that the Agriculture Canada is going to have to raise its 2017/18 Canadian barley exports forecast from its current estimate of 2.45 million tonnes.
For malt barley prices, a $5 CAD handle hasn’t been seen on most bid sheets in the past month. In intuitively asks the question of how far out malt barley buyers are covered.
What Now for Barley Prices in 2018?
Next week, we’ll be releasing our 2018 barley forecast to subscribers of GrainCents.
Our price outlooks, trends, and forward-looking, actionable insight will allow you to start penciling in gains and prepare yourself for selling opportunities where others are not looking (i.e., locking up the January 2018 contract, as discussed above).
This 2018 barley forecast alone is worth more than the $300 USD annual subscription to GrainCents.
Ultimately, this is the best way to accelerate your grain marketing plan in the New Year.
In GrainCents today, there are 7 different factors that we have identified as either bullish, bearish, or just noise for barley prices.
We also identify in GrainCents what percentage you should be sold on your 2017/18 old crop barley, as well as where your sales should be on your 2018/19 barley crop.
In addition to daily insight on prices and grain analysis, you’ll get our 2018 barley forecast, exclusive only to GrainCents subscribers next week.