Feed barley market holding fall season price gains

Western Canada cash feed barley pricing has gradually worked its way higher through the fall season. Despite U.S. corn price weakness, Lethbridge cash feed barley bids are holding up rather firmly in the $220 per tonne area. Central Alberta feedlots are around the $207 to $214 per tonne area. That said, prices have stabilized over the past two weeks.

Elevated demand

Rising cattle numbers entering southern Alberta feedlots this fall season (up seven per cent relative to last year), plus an advance into more wintery conditions, and less lower quality wheat coming to market this year appear to have elevated feed demand for barley. Also, we can factor in a higher percentage of 2017 Canadian barley production that is of malt quality so growers are reluctant to yet forfeit such high quality inventory into feed channels yet.

Statistics Canada revised its 2017 crop estimates last week, pegging Canadian barley production a bit higher than expected.   

Statistics Canada revised its 2017 crop estimates last week, pegging Canadian barley production a bit higher than expected at 7.9 million tonnes, though still well short of last year’s 8.8 million tonne crop. A large portion of this smaller crop is of better quality, malt quality, though more than the malt sector will require.

Competing corn market

While our feed market will likely remain firm, I am concerned that a weakening U.S. corn market may become increasingly competitive for the southern Alberta feed-user dollar. Fundamental news that might lift oppressively bearish attitudes in the corn market remains lacking today. Trade missions have come across the Canada/U.S. border looking for corn selling opportunities, with a couple of trainloads already scooting north over the border from Montana this fall season.

That said, PFCanada suspects that most feeders likely still prefer barley over corn in cattle rations, given the convenience of multiple local sources relative to the risk of relying on cross-border rail deliveries.

Also, any weakness in the Canadian dollar, which is now testing below 78 U.S. cents again, works against the economics of hauling U.S. corn north over the border. Throw in the prospect of diverging interest rate policy, with the U.S. expected to raise rates faster than the Bank of Canada, and the loonie could move even lower to make Canadian-produced grain that much more price competitive.

Bottom line

Growers will remain reluctant sellers of what appears to be malt quality barley into the domestic feed sector for now, and we might be surprised in a few months how much more barley finds its way into export channels than initially anticipated.


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.