Canada: Barley production forecast to drop by 10% in 2017/18

For 2017-18, Canada’s barley production is forecast to decrease by 10% to a near-record low of 7.9 mln tonnes due to lower area and a lower average yield, Agriculture and Agri-Food Canada said in their December report.

Although carry-in stocks are expected at a seven-year high (2.1 mln tonnes), supply is forecast to decrease by 1% to 10.2 mln tonnes due to lower production.

Domestic barley use is forecast to increase by 5% to 6.2 mln tonnes due to higher feed and industrial use.

Total barley exports are forecast to increase by 5% to 2.45 mln tonnes due to lower world supplies.

Canada’s barley carry-out stocks are forecast to decrease by 27% to 1.6 mln tonnes but remain above the previous five-year average.

The Lethbridge in-store feed barley price is forecast to increase due to the tight total barley supplies and the decline in the availability of other domestic feed grain substitutes.

The average barley yield was 3.73 tonnes/hectare (t/ha) in Canada, which is, despite the dry conditions on the Western Prairies, the third highest average yield on record. Barley yields in Eastern Canada were slightly below last crop year and the previous three-year average. Yields were better in the Maritime Provinces but Ontario and Quebec were below average.

Despite the less than ideal weather conditions on the Western Prairies this crop year, yields were better-than expected but below the record of 2016. This said, Manitoba had an excellent year and achieved a record average yield which was 10% higher than 2016 and 26% higher than the previous 10-year average. In terms of total barley production, Saskatchewan closed the gap on Alberta. Saskatchewan is the only prairie province which is consistently increasing its production which is about 11% higher than its previous three and five-year averages. Alberta’s yield and production decreased by 7% and 11%, respectively. Production continues to contract as it was 9% below the previous three-year average but 16% below the 10-year average.

For 2016 and 2017, the volume and quality of the crop turned out to be better-than expected, given the harvest and growing conditions on the western half of the Prairies. This crop year, the Lethbridge barley prices have been moving higher in a step-wise fashion. Prices increased and then hit a stable plateau before moving higher again. Since mid-August, higher feeder and slaughter cattle US futures prices have helped provide feed grain price support. Lethbridge barley prices stabilized, after the latest jump, at about C$220/tonne. Provincial feed barley basis levels are varying across the three Prairie provinces with Alberta narrower than average, Manitoba wider than average and Saskatchewan close to its previous five-year average. In Western Canada, the average spot premium for the crop year to-date for malting barley relative to feed barley has been about C$40/tonne which is near the previous five-year average.

Since 2014 China has become the dominant export destination for Canadian barley and, based on export values, most of it is exported as malt barley. There continues to be strong competition for this market specifically from Australia and Ukraine. In November, China lifted an export ban on two Australian companies that was in place from September 2015 due to snail contamination.

World feed barley prices have remained flat against near- to-unchanged world corn prices and overall trade is expected to decline for a second year. World malt barley prices have strengthened with Australian malt prices showing the largest increase as their barley output declines from last year’s record levels.

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