USA: According to initial contract discussions, malting barley prices would be higher for 2006

The malting barley contract discussions with producers already started with at least one malting firm, Cargill Malt, and one of the messages which come from that first meeting is contract prices may be higher in 2006, according to the report of 23 November from Farm and Ranch Guide.

“We believe our grower contracting program may show producers significantly better prices in 2006 than in 2005,” John Zietz, Cargill Malt's barley supply chain manager said. “We think farmers might find barley significantly more attractive in 2006 relative to the prices of other grains. Plus fertilizer and other input costs are lower for malting barley than for other crops.

“I can't answer for the other maltsters, but we currently expect our prices to be higher, no doubt,” he continued. “Prices were definitely lower last year than they had been the previous couple of years. We came out of 2002, when the production wasn't real good, so the prices were significantly higher in 2003. Then in 2004 they drifted a little bit lower and in 2005 they drifted a little bit lower again. Now this year we are rolling out prices that probably won't be as high as they were in 2003, but they may definitely be better than they were in the last couple years.”

Cargill Malt company scheduled subsequent meetings for producers interested in malting barley contracts during the next few weeks. Even though some would term this past year as a poor year for barley, Zietz said it was more of a typical year regarding the selection and quality. Both 2003 and 2004 were exceptional years as far as good, consistent quality. However, this year's crop wasn't quite as consistent. He points out there is still some excellent malting barley in the pipeline, but the industry needs to look ahead.

Zietz indicated as well that farmers need to start sharpening their pencils and look at all the costs associated with raising a crop before excluding some from their rotational plan.

“A grower needs to sit down and go through all of his direct costs for each crop such as fertilizer costs and propane to dry a crop and go through this process every step of the way,” he said. “Once you have done this, if you take an objective look at barley, especially malting barley, it should be a real competitive crop based on somewhat lower input costs compared to other crops that could be planted. If you look at a normal scenario, malting barley should be pretty attractive.”

Concerning spot cash prices for malting barley, Zietz said prices have firmed up somewhat this fall, but it's hard to forecast what will happen in the next few months.

“We are in the market every day buying barley,” he noted. “Our bids are actually a little bit inverted right now. I have a better bid right now than I do down the road a ways. We're competing with row crop harvest and everything else and we wanted to encourage movement of barley sooner rather than later.”

Looking at the feed barley side of things, prices have inched upwards at many local elevators, despite the recent announcement by USDA of an 11 billion bushel corn crop in the U.S. But Steve Edwardson, executive administrator of the N.D. Barley Council feels the upturn may be due to the fact that some of the marginal quality barley is now being looked at as possible malting barley.

“They may be able to use some of the slightly off-grade barley and that can sometimes take that feed barley price and sneak it up just a little bit,” Edwardson stated.

A check of local elevator prices on the website smallgrains.org showed feed barley prices were steady to up a nickel, with one location showing a 13 cent increase. Prices for feed barley ranged from a low of $1.24 per bushel to a high of $1.48.On the malting barley side of the board, prices were generally steady, with a nickel advance noted at one location and a fall of 17 cents at another. Price spread for malting barley on the local elevator boards went from a high of $2.20 a bushel to a $1.75 low.

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