Canada: The demand for western Canadian feed barley has shifted dramatically

Over the past 20 years, the demand for western Canadian feed barley has shifted dramatically from the export market to the domestic feed market, as the livestock sector in Western Canada expanded and international competition intensified, Agriculture and Agri-Food Canada (AAFC) has commented in its Bi-weekly Bulletin “Feed Barley: Situation and Outlook”.

For 2005-2006, domestic feed demand is expected to be strong, due to larger inventories of cattle and hogs and the partial opening of the United States (US) border to Canadian beef and cattle. However, larger domestic supplies of barley with below average quality, lower US corn prices, and the strong Canadian dollar are projected to depress the Lethbridge feed barley price to $110 per tonne (/t), the lowest in 10 years.

For exports, despite lower world corn prices, world feed barley prices strengthened early in the crop year, because of tighter exportable supplies from major exporters. The strong Canadian Wheat Board (CWB) Pool Return Outlook (PRO) relative to the domestic off-Board price has attracted large deliveries to the CWB which, when combined with less competition overseas and a wider spread of export over domestic prices, has provided export opportunities for Canada.

For 2005-2006, world barley production is estimated by the USDA to decrease by 12% from 2004-2005 to 134 Mt. Production is estimated to decrease for the European Union (EU), the Black Sea region, Canada and the US. World supplies are expected to decrease by 5% to 165 Mt because higher carry-in stocks only partially offset lower production. In response, world barley consumption is projected to decrease to 141 Mt, from 145 Mt in 2004-2005, of which feed barley consumption is forecast to decrease from 99 Mt to 96 Mt. As a result, world carry-out stocks are expected to decrease by 7 Mt from last year to 24 Mt and the stocks-to-use ratio is expected to decrease to 17%, from 22% in 2004-2005 and the 5-year average of 19%.

World barley trade is forecast by the USDA to decrease to 16.2 Mt, from 17.5 Mt for 2004-2005 and the five year average of 16.8 Mt. World feed barley exports are forecast by Agriculture and Agri-Food Canada (AAFC) to decrease from 12.5 Mt for 2004-2005 to 11.5 Mt. Among the major exporters, Russia and Ukraine are expected to export a combined 4.8 Mt of feed barley, followed by 3.0 Mt from Australia, 2.2 Mt from the EU and 0.9 Mt from Canada. For the major import markets, Saudi Arabia is forecast to import 6 Mt, followed by 2.4 Mt to other Middle East countries and 1.1 Mt to each of Japan and North Africa. Within the Middle East and North African market, import demand is expected to grow substantially for Algeria, while imports into Iran, Tunisia and Syria decrease sharply.

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