Canada: 2017-18 barley production expected to decrease by 17%

For 2017-18, Canada’s barley production is estimated to decrease 17% to a near-record low of 7.3 mln tonnes due to the low area seeded and the below average total yield, Agriculture and Agri-Food Canada said it its November report.

The lower production will cause total supply to decrease by 7% to 9.5 mln tonnes despite large carry-in stocks which are at a seven-year high. Total domestic use is forecast to increase by 3% to 6.027 mln tonnes due to higher feed and industrial use. Exports are forecast to decrease by 3% to 2.25 mln tonnes due to lower barley supply and high world corn and wheat supplies. Carry-out stocks are forecast to decrease by 41% to 1.3 mln tonnes which is below the previous five and ten-year averages.

The Lethbridge in-store feed barley price is forecast to increase to CAD205-235/tonne due to the tighter total barley supplies, a higher US corn futures price and the decline in the availability of other domestic feed grain substitutes.

The barley harvest in Canada is complete. The northern and north-central parts of Alberta were the last to finish harvest. Harvest conditions were much better than last year and the quality of the crop is good-to-excellent for both feed and malting barley across most regions.

After about five years of near-zero activity, the ICE Futures Canada Barley contract was delisted as of Wednesday, October 25. The daily cash quotes for Lethbridge feed barley and wheat will remain. Lethbridge cash barley came off crop year highs at the end of September; however, the decline was minor and prices remained strong. The lower barley supply, smaller forage stocks and the recent upturn in the US hog and cattle futures markets have supported barley prices. So far this crop year, spot malt prices are similar to last crop year.

The premium for malting barley relative to feed barley is highest in Manitoba and Saskatchewan. For Alberta, the premium is lower because the demand for feed barley compared to malting barley is stronger than in the other provinces.

World prices for feed barley have been firm in the past month due mainly to smaller barley crops in Australia and the EU and the premium spread to world corn prices is at a three-year high. For the first three months of the crop year, world feed barley prices are 20% higher than for the same period in 2016-17. Based on long term seasonality the world feed barley price should remain steady until 2018 before posting some additional gains. Generally prices decline as the world’s fall seeded barley goes to market in May. From the beginning of the crop year the world malt-to-feed premium has narrowed due to lower Australian prices. However, the world average price for malt barley is similar to 2016-17 at this time.

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