USA: Malting barley prices in North Dakota could improve

The malting barley price has increased considerably from harvest lows and could improve further in the months ahead. The reason is “U.S. and Canadian barley stocks are being drawn down, although they are far from tight,” North Dakota State University Extension Service communicated on December 22.

The malting barley price in North Dakota bottomed in August at $1.84 per bushel, according to the USDA's monthly averages of net prices received by farmers in the state. Their preliminary price for November was $2.30, an increase of 46 cents.

The price should increase to at least the highs for the 2004 marketing year (July through June). The price reached a postharvest high of $2.46 in January 2005. Previous highs were $2.88 in May 2004 and $3.37 in June 2003.

Barley ending stocks are projected to fall below those of the last two years, according to the USDA's December supply and demand report. Ending stocks of 101 million bushels are expected for this marketing year, compared with 128 million last year and 120 million two years ago.

Ending stocks for the 2006-07 marketing year likely will fall even further. Ending stocks of 92 million bushels are a possibility, according to a preliminary analysis in November by the Food and Agricultural Policy Research Institute.

In addition, Canadian barley stocks are expected to decrease, according to an Agriculture Canada report released in December. Ending stocks were projected to decrease from 160 million bushels in 2004-05 to 138 million in 2005-06.

Also, the quality of the Saskatchewan barley crop was below average in 2004 and 2005, according to a Saskatchewan agriculture report on Nov. 16. Twenty-two percent of the crop was of malting quality in 2005 and 25 percent in 2004, compared with the 1995 through 2004 average of 31 percent.

If Canadian barley acres remain the same for 2006 and average yields are produced, stocks could be further reduced, possibly to a level below those of 2003-04. Ending stocks were 68 million in 2002-03 and 97 million in 2003-04. Those were the years when the highs of $3.37 and $2.88 were achieved in North Dakota.

All U.S. barley production has decreased considerably in the last 10 years. Since 1996, production has dropped 46 percent. Of the major producing states, North Dakota dropped the most at 60 percent compared with 2 percent for Idaho and 20 percent for Montana.

The USDA is projecting a seasonal average farm price for all barley of $2.35 to 2.55 for 2005-06. The averages were $2.48 for 2004-05 and $2.83 for 2003-04.

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