Barley market offering decent selling opportunities
Feed grain prices across Western Canada have backed off recent highs as producers push more aggressively to sell some portion of their recent harvest.
Cold, wet and snowy weather throughout September and into first-half October slowed down or stalled harvest across a large swath of Alberta and Saskatchewan. And unfortunately, late season harvested crop quality was downgraded.
Adding to the Prairie feed supply
At the lower end of the wheat and barley quality spectrum, PFCanada had advocated being an aggressive seller this harvest season. Feed wheat bids have come under some pressure as the challenging harvest season added unexpectedly to the Prairie feed supply. That was also true regarding barley - more feed barley now than earlier anticipated.
Cash bids delivered into feedlot alley of southern Alberta slipped to around the $5.35 per bushel level for nearby delivery. Moving a little further north, cash bids are closer to $5.20 per bushel. In the Edmonton area, feeders are bidding closer to $4.60 per bushel delivered. In Saskatchewan, feed barley fetches around $4.00 to $4.35 per bushel depending on location.
Here are the top five reasons PFCanada has taken an aggressive approach to feed grain sales this fall season.
- Price is good relative to history
- Market has engaged all measure of feed grain crop options to find a fix with substitution of various crops into the feed mix, and done so early
- Deep U.S. corn import book will reduce late crop year user demand
- Good farm cash flow choice
- Without a crop wreck, limited upside where price would have to be $10 a tonne higher into June to justify cost of storing
I should mention that from the global perspective, barley supplies are tightening this year, which has led to a reduced export pace as the European Union and Black Sea region wrap up planting of winter season cereals, while Canada rounds the clubhouse turn on harvest and Australia prepares for a drought-compromised harvest in the coming few weeks.
At the beginning of October, we noted cash bids on Copeland malting barley in central Saskatchewan jumping to $5.40 per bushel for January to March delivery. We had thought at the time that a $5.50 per bushel Saskatchewan price was attainable, but just needed patience. That was before Canada quality adversity emerged with this troubled cold and wet harvest season.
We could not rule out malt barley pricing rising higher still to maybe $5.75 per bushel sometime this marketing year. Shooting for $6 seemed too risky and greedy.
World supply issues argue the case for a higher price, but demand adjustments might fool us. That's because we previously learned that demand rationing behaviour is apt to be deployed again at higher-end price extremes.
So then, our feeling was anything in the $5.50 to $5.70 per bushel range would be a decent target to get very aggressive on cash sales. In fact, move it all if that price can be attained.
Today, I see malt barley cash bids in Saskatchewan in the area of $5.50 per bushel for January forward delivery. Alberta bids are up as high as $5.75 per bushel for January forward. Price is historically at upper end of the value range.
At that price level, PFCanada cannot justify the risk of holding back on cash sales. Seldom has malt barley pricing traded at $6 per bushel. Demand usually adjusts to high price, lowering of malt standards or replacing with non-barley adjuvants to put a ceiling on the market.
Fall season feed and malt barley prices offering decent marketing opportunities.
Mike Jubinville of Pro Farmer Canada offers information on commodity markets and marketing strategies. Call 204-654-4290 or visit www.pfcanada.com to find out more about his services.