Canada: Barley use forecast to increase 5% in 2016-17

For 2016-17, Canada’s total domestic barley use is forecast to increase by 5% to 6.411 mln tonnes due to higher feed use for cattle and hogs, Agriculture and Agri-Food Canada reported on April 14.

Exports are forecast to decrease by 9%, to a 12-year low of 1.825 mln tonnes, due to lower world feed barley demand. However, malt barley trade remains largely unchanged.

Barley carry-out stocks are forecast to increase by 42% to 2.1 mln tonnes, well above the previous 10-year average.

The Lethbridge cash feed barley price is forecast to decrease due to the higher supplies, softer US corn prices and competition from other feed grain substitutes in the domestic market.

In the past month, the Lethbridge barley market, after making crop year lows, started its slow long-term seasonal climb and rebounded C$5/tonne (t) to C$160/t. Based on this year’s strong supply of feed grains and the addition of spring-threshed cereals, gains in the Lethbridge price will be limited. There may be an additional C$10/t for the Lethbridge price and more swings in regional feed barley prices depending on the quantity, quality and weight of the spring threshed cereals. Throughout this crop year, Canadian Prairie feed barley basis levels have been close to the previous five-year averages. However, regional basis levels could widen as the spring-threshed grain hits the local markets. Early indications are that the over-wintered cereals did not fare well and some may be unusable. Malt barley pricing on the Canadian Prairies continues to be lower than last crop year. However, since the beginning of 2017, it has been mainly steady to slightly lower.

The USDA Grain Stocks report showed March 1 US barley stocks 7% higher than 2016 and the increase is sitting in off-farm or commercial locations as producer stocks are slightly lower. Total US barley stocks are 25 and 18% higher than the previous five and ten-year averages, respectively. The large US stock situation has led to the decline in US feed and malt prices and the continuing lack of US malt barley contracting. World feed barley prices were generally flat this past month although world corn prices declined. The world malt barley market was able to post a slight overall average price gain and widened its premium to the price of feed barley. Strong old crop coarse grain supplies continue to pressure prices with little upward price movement expected for the remainder of the crop year.

For 2017-18, Canada’s barley-seeded area is forecast to decrease 3% from 2016-17 (to 2.5 mln ha) due to high barley carry-in stocks. Production is forecast to decrease 9% to 8.0 mln tonnes due to the lower area and a forecast for average yields. Despite the lower production, the large carry-in stocks will allow total supply to decrease by only 2% to 10.1 mln tonnes.

Total domestic use is forecast to increase by 3% due to slightly higher feed use in cattle and hog production. Exports are forecast to increase by 3% to 1.875 mln tonnes due steady world supplies and trend trade patterns.

The barley crops in Canada and the US are currently forecast to decrease for 2017-18. The USDA Prospective Plantings report indicated a 17% decrease in the US barley area from 2016, which would be a new all-time record low. Of the three large US barley states, only Idaho is showing an area increase of 5% but the combined area in Montana and North Dakota is down 33% from 2016 and 45% from 2015. For Montana and North Dakota, this is consistent with the malt barley contract reductions implemented by the major US brewers in the past two years. Despite the decline in barley area seeded, high carry-in stocks for both Canada and the US will limit any major price recovery. In addition, the majority of US stocks are high quality malting barley.

E-malt.com, the global information source for the brewing and malting industry professionals. The bi-weekly E-malt.com Newsletters feature latest industry news, statistics in graphs and tables, world barley and malt prices, and other relevant information. Click here to get full access to E-malt.com. If you are a Castle Malting client, you can get free access to E-malt.com website and publications. Contact us for more information at marketing@castlemalting.com .