Canada: Lethbridge barley prices may see further lows depending on price movements in other markets

Lethbridge barley saw a slight bump in prices the last few weeks, but Jim Beusekom, grain broker at Marketplace Commodities in Lethbridge, said prices could see further lows depending on the price movement of other feed markets, Alberta Farm Express reported on November 5.

"Through the second half of October, we've seen the market rally just slightly in Lethbridge," he said. "Prices moved upwards about C$5 a tonne. That's our grand rally, or about as close as we can get to a rally this year."

Beusekom said the boost was due to growers holding back on selling after they finished harvest activities.

"Following harvest, it's pretty normal that farmers like to hold back," he said. "Actually, I wouldn't even say they're holding their grain back. After you're done harvest, probably the last thing a farmer does the day after he parks his combine is start to load trucks."

According to the Alberta Canola Producers Commission, Lethbridge barley during the week of Oct. 28 was priced at C$185 per tonne.

"Lethbridge is trading in the C$180 to C$185 per tonne range right now," said Beusekom. "That's what feedlots are paying. Farmers can defer their sales to January, February or March and pick up C$3 or C$4 a tonne. They can also defer into the springtime and pick up C$7, C$8 or C$9 a tonne if they go out quite a ways. There's a little bit of incentive for them to store it."

However, the wildcard in terms of near-term pricing is corn futures on the Chicago Board of Trade. Beusekom said if USDA's world agricultural supply and demand estimates (WASDE) report, due out on November 8, is bearish for corn, it could cause Lethbridge feed barley to decline as well.

"If the Nov. 8 USDA report comes in bearish for corn, and we see corn prices continue to drop, it may actually warrant a drop in feed barley," he said. "We might actually see corn competitive in Lethbridge against feed barley, and if that happens, in order for barley to keep finding homes, it's probably got to drop."

Canadian wheat could also challenge Lethbridge barley for a spot in the feed market.

"The other thing that is noteworthy is that the wheat market is also under pressure, as it has broken some of its support levels, and has started to come back down quite a bit," Beusekom said, noting cash prices are down as much as 40 to 60 cents a bushel.

"Some of the lower-grade wheat should start to compete against feed barley and that could start happening really anytime."

Looking ahead, Beusekom said he can't predict how low prices could possibly go, but said any movement will likely be volatile.

"The only thing we can predict is that the markets will be volatile," he said. "The highs will be higher than what people think and the lows will be lower than what people think they'd be.

"Don't be surprised if we still haven't seen a low in these markets."

06 November, 2013