Canada: Weekly market outlook on feed barley

Bullish Factors. The International Grains Council is forecasting world barley ending stocks to be 5 million metric tonnes less in the 2005-06 marketing year than last year. Agriculture and Agri-Food Canada (AAFC) is predicting a 10% increase in domestic feed barley prices next year. They see carry-out stocks falling by over 25% to 2.2 million metric tonnes. Part of the reason is an expectation by AAFC that there will more cattle and hogs which will in turn increase the demand for feed barley. AAFC’s crystal ball is telling them that domestic feed barley consumption will increase by about 8% next year, according to the report of .

The US Food and Drug Administration (FDA) has approved the marketing of barley as a health benefit grain. The FDA has accepted the scientific evidence presented to it that barley has a beneficial effect in lowering cholesterol.

Bearish Factors. The warm weather on the prairies has reduced feed grain demand. Lethbridge cash values have fallen between $5 and $8 per metric tonne in the last couple of weeks of January. Other reasons cited for the falling values were farmers wanting to sell heated grain, farmers selling rejected malt barley as well as the abundance of both feed wheat and feed peas displacing barley in feed rations due to their relatively low prices.

AAFC is predicting that world barley production will jump by 7% next year to 145 million metric tonnes. AAFC does not expect world consumption will be able to keep up with the increased stocks so as a result world barley carryout stocks will be up by about 4% over this year’s levels. AAFC thinks that CWB feed barley exports will decline next year and therefore the CWB will not be able to offer the same price levels for feed barley as they did this year.

European intervention sales and Australian new crop barley offerings are pressuring Black Sea barley values. The Australian Bureau of Agricultural and Resource Economics estimates that this year’s Aussie barley crop will be 8.4 million metric tonnes versus last year’s 6.4 million metric tonnes.

Strategie Grains is predicting that the European Union will produce 7% more barley next year. The good news is that they also think that European barley consumption will increase at the expense of wheat and corn.

Factors To Watch. Some analysts are expecting Canadian barley acres to up next year. AAFC, for example, is forecasting an 8% increase in seed area for barley which will result in a 3% increase in production over this year’s levels. The CWB’s Bruce Burnett is predicting that barley acres will up 5 – 7% next year depending upon the value of competing crops.

There are conflicting views on whether or not livestock producers can claim back the duty that was paid on the recently introduced tariff on US corn sold into Canada. The Corn Producers claim that livestock does not qualify as “manufacturing” and therefore is not eligible for a refund on the duty. The Canada Border Services Agency has told producers that they are eligible for a refund on the duty they paid when the livestock is exported to the USA. Strategie Grains is warning that the bird flu may affect international feed barley demand.

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