USA: Malting prices remain strong

Disappointing harvest figures for malting barley continue to come in from across the region, further enforcing the notion that malting barley supplies will be tight at least until the 2012 harvesting season, Farm & Ranch Guide reported on September, 26.

Kayla Hoffman from Sun Prairie Grain in Minot, N.D., said for the most part yields were considerably less than they have seen for the past few years, although in most cases the quality was good. Quality-wise the biggest concern is slightly high VOM numbers, which often results in the grain being rejected for malting purposes. But that might not be the case this year, according to Hoffman.

"The yields were definitely lower this year than in past years, and I don't think anyone had yields that were worth bragging about," she said. "The protein and test weights were fine, but the VOM averaged around a 1.8, which is a little higher than the maltsters like to see. But I think the maltsters realize things are going to be a little bit tighter this year in terms of supply and are going to be more willing than they have in past years to work with quality issues.

"We will probably see some barley that wouldn't have been applied to malting contracts before that will this year."

Speaking of contracts, the maltsters have come out with contract prices for the 2012 crop season. Hoffman, who offers contracts for Rahr Malting Company, said earlier this month contracts were being offered in the Minot area for $7 a bushel but recently the price had dropped down to $6.90 with an "act of God" clause included. However, some potential growers said other companies were offering a contract price of $6.05 during the Big Iron Farm Show that was held in mid-September.

Hoffman said there haven't been a lot of growers signing up yet, mainly because they have been too busy with field work and haven't had the chance to sit down and push the pencil. However, some growers have indicated that even at the $7 level, they would be hesitant to sign a contract at this time, noting that they feel the contract price should be at least $8 or $9 a bushel considering the current price of corn and wheat.

In regards to the cash markets, malting prices have remained steady with strong support coming from the reduction in supply, according to Hoffman. However, feed barley prices have been slightly lower as they have moved in response to lower wheat and corn prices during the past few days.

"We are seeing the premium of malting barley over feed barley start to expand out a little," she noted, "because of the malt barley shortage and the drop in wheat and corn prices."

Currently cash prices for malting barley are in the $7 neighborhood, while feed barley prices are in a range of $4.60 to $4.75, according to Hoffman.

"Even though feed barley has backed off a little, it still isn't a horrible price. But we are seeing a widening of the spread between feed barley and malting barley and that might continue to widen a little more as the price of corn continues to fall."

The export market for feed barley has been pretty quiet lately, but she noted that there has been relatively good demand for feed barley domestically. She doesn't know the reason for this demand but indicated that she gets inquiries about purchasing feed barley quite frequently, which is usually a sign of strong demand.

"Those needing to buy feed barley may be in a bit of a predicament this year, too, if the maltsters start taking in some barley that would normally be classified as feed barley. This would shorten up the feed barley supply and could support those prices as well down the road," she said.

As we move closer to the 2012 crop year, Hoffman said there is some concern with the maltsters on how they are going to regain those acres that were lost this year. By offering a pretty aggressive contract as far as price they hope that growers will take another look at barley and see that it can be a profitable venture in their cropping rotation.

28 September, 2011