USA: Barley markets remain stable in face of good crop conditions

The barley harvest is about ready to start in some areas of the region and the July 7 USDA National Agricultural Statistics Service report estimates 71 percent of the barley crop in North Dakota to be in good to excellent condition, with 25 percent of the crop in fair condition, 3 percent in poor condition, and 1 percent in very poor condition Farm & Ranch Guide posted on July 18.

In general, an average crop is anticipated, according to Steven Edwardson, executive administrator of the North Dakota Barley Council.

“However, cool temperatures have delayed crop development,” he noted, “with only 1 percent of the barley crop turning as of July 6, compared to 7 percent turning one year ago.”

The USDA acreage report on June 30 indicated nationally barley plantings increased by 2.7 percent, from 4,020,000 acres in 2007 to 4,130,000 acres in 2008. North Dakota growers also planted more acres to barley with 1,500,000 acres seed this year, which represents a 2 percent increase over 2007. Earlier acreage reports were suggesting the barley acres might be higher, but Edwardson said higher wheat prices stimulated a shift in acreage to more wheat production.

According to the season's first production report, which was released on July 11, North Dakota growers are expected to harvest 1,400,000 acres in 2008, which is an increase of 10,000 acres from 2007. Yield for 2008 in North Dakota is estimated at 54.0 bushels per acre, which is a decrease of 2 bushels per acre from the average yield in 2007.

Using those figures, production for 2008 in North Dakota is expected to total 75,600,000 bushels, a decrease of 2,240,000 bushels from the 77,840,000 bushels harvested in 2007.

The drought conditions in western North Dakota will contribute in part to the lower production levels in 2008, Edwardson said.

On the export side, Japan continues to purchase U.S. feed barley, according to Edwardson.

“In mid April 2008, Japan purchased 179,740 metric tons of feed barley. The U.S. market share was 54,740 metric tons of this purchase, which is approximately 30 percent of the total tender,” he said. “In June 2008, Japan purchased 82,000 metric tons of feed barley, 22,000 tons of which was from the U.S.

“Aggressive purchasing from Japan in 2007 has resulted in some carryover stocks and thus lower purchasing requirement. High world grain prices are stimulating caution in the Japan market,” he continued.

“Buyers of malt barley contracted a significant portion of their production needs in 2008. There will be competition for open production between malt and feed barley, stimulated in part by higher corn prices and the subsequent substitution of barley for corn in livestock rations.”

Barley acres have tumbled by 17 percent in Canada to 9.1 million acres. The decrease was largely due to better prices and profit potential for wheat and canola, Edwardson said.

Barley stocks have seen a 1 percent decrease from a year ago, according to the USDA NASS June Grain Stocks Report. The June 1 barley supply was estimated at 68.1 million bushels. On-farm stocks accounted for 9.95 bushels, which is 32 percent below the year ago figure and off-farm stocks are 7 percent higher than a year ago at 58.3 million bushels.

The spot cash prices for feed and malt barley remains relatively stable across North Dakota, according to Edwardson. Feed prices currently range from approximately $4.40 to $5.50 per bushel and malting prices range from around $5.85 to $6.70 per bushel. Edwardson expects prices to remain relatively stable as harvest begins.

In summarizing the market situation for barley at the current time, Edwardson said, “Growers are guardedly optimistic about their 2008 crop. High input prices will require stable production and price to secure an opportunity for profit. Most commodities are experiencing generally good prices at this point in time, and thus there is optimism for profitability into the upcoming 2008 production year.”

18 July, 2008