USA, North Dakota: The top barley-producing state in the nation has seen acreage rise and fall like a yo-yo in recent years, with contract prices one of the bigger influences on the string. Falling barley contract prices are at the root of a dramatic drop in expected production of the malting grain in North Dakota this year, officials say, according to Associated Press report from July 18.

The crop is estimated at 90 million bushels - a drop of nearly 25 % from last year, according to the Agriculture Department. Last year's production was double the previous year's. That has led to sizable stocks - more than 30 million bushels on June 1, up 123 percent from 2003. "Last year's crop was excellent quality, so now everybody's sitting on it, hoping that if something happens to this year's crop they'll be able to sell it at a premium price," said Dazey farmer Jim Broten, chairman of the North Dakota Barley Council.

North Dakota typically produces between one-third and one-half of the U.S. crop. When the nation's 2002 crop turned out to be the smallest in 65 years, brewers and maltsters who were worried about supply offered lucrative contracts to farmers for the 2003 crop year, leading to the big crop and bulging bins.

But contract prices have fallen this year. "That has steered a few away" from barley, and toward other crops such as corn and soybeans that provide better returns, said Steve Edwardson, the Barley Council's administrator. Other factors have played into the barley drop, he said. They include crop insurance problems, flooded-out acres in northern North Dakota and potentially poor yields in the dry western part of the state. But both Edwardson and Broten said the barley contracts were not high enough this year to buy a lot of acres. North Dakota acreage is down 20 percent from last year, the Agriculture Department said.

Malting companies and brewers typically do not make public their contract prices, for competition reasons. Cargill declined comment on the lower prices. Anheuser-Busch did not immediately comment.

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