USA: Minnesota Barley Growers Association’ executive director looks for new ways of setting malting barley contract prices

Both feed and malting barley prices continue to move upwards, especially in concert with corn prices, according to Marvin Zutz, executive director of the Minnesota Barley Growers Association.

Even though cash barley prices are good right now, growers haven't heard too much about barley contracts from the maltsters.

“Right now the growers are patiently waiting, hoping the maltsters will come out with contracts in mid-December that will be competitive with the other crops,” he said. “The maltsters are going to have to find out that the producers are going to need stronger prices if they are going to grow barley. That's the long and short of it.”

With some of the other crops already coming out with contracts for the 2007 growing season, Zutz feels the malting industry can't wait much longer if they are going to successfully compete for acres next year.

“We're seeing contracts already for sunflowers and the wheat, corn and soybean people have futures so they can lock in profits and the maltsters are stuck in the mud with their old pricing philosophies,” Zutz said.

“We've tried to impress upon the maltsters the fact that the growers are out there looking at their farm plan for next year already. The farmers have to get in line to buy seed. And you can't expect a barley farmer to wait forever into March until they find out what the price for malting barley is going to be,” he added.

Zutz also hinted there may be a new way of setting malting barley contract prices sometime down the road.

“There is discussion out there that the maltsters are looking for alternative pricing methods - trying to attach barley prices to perhaps the wheat futures,” he said. “In the past they tried to hook up to the corn futures, but that wasn't a real good barometer. So our suggestion to the maltsters was take a look at the spring wheat futures and see if you can't devise some sort of contracting means where the growers could protect themselves on the futures market by taking out a barley contract. Currently they are researching that idea.”

In other barley marketing news, the USDA Economic Research Service (ERS) in their monthly Feed Outlook report issued on November 14, increased the projected prices farmers will receive for barley during the current marketing year which runs from June 2006 through May 2007. Projected prices ranged from $2.75 to $3.05 a bushel, compared to last month's forecast of $2.55 to $2.95. The service said the projected prices were raised due to the strong current prices for corn and expected farmer marketings of barley through September because of all the potential for increased season-average prices.

The ERS expects to see a decrease in barley stocks during the 2006/07 marketing year from 108 million bushels at the start to ending stocks of 88 million bushels. Production in the U.S. is expected to be off by 32 million bushels.

Even though predicted usage is expected to decline by 23 million bushels and barley imports will increase by 10 million bushels, the service expects a 20 million bushel decline in stocks, mainly due to a decrease in production.

The service reported that the average preliminary price for No. 2 feed barley in Duluth during the month of September averaged $1.89 a bushel, compared to $1.71 the month before. The average price for No. 3 or better malting barley in Minneapolis during September was $3.22 - eight cents higher than the month before.

On a world production note, the ERS said the main news is still coming from Australia, where barley production prospects continue to deteriorate due to drought.

A check of local elevator prices on the smallgrains.org website indicated continued strength in both the feed and malting markets.

Feed barley prices were higher on virtually all of the elevator price boards, with increases ranging from a nickel to 50 cents a bushel. Prices varied from a low of $2.30 to a high of $2.80 a bushel.

Malting barley prices were steady in some locations, while advancing at other elevators by as much as 25 cents. Prices were trading in a 60-cent range with the low set at $2.75 and high prices of $3.35 a bushel reported.

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