USA: Barley prices flat for new crop but this may change if weather affects corn and soybean production
Barley prices are flat for new crop, but prices could change if weather problems affect corn and soybean production in August, Farm & Ranch Guide reported on August 5 citing Frayne Olson, NDSU crops economist/marketing specialist.
“Soybean markets are extremely volatile. Soybean yields are a more important fact in what is happening to prices,” Olson said.
There are three ways the U.S. gets grain: annual production, imports and carryover.
Carryover is the big one concerning markets for most grain crops, and there is carryover in all stocks.
With barley, there is still an uncertainty with how many bushels will be produced this year and the quality of those bushels. But barley buyers don’t have to worry about where to find barley because of very good production last year.
The USDA divides barley into feed, exports, seed usage and food, alcohol and industrial use.
“The vast majority of the food, alcohol and industrial use is for malt,” Olson said.
The long-term trend in consumption of barley is down, and acreage of barley has dropped, along with feed usage. Producers feed more corn than barley because it is more available.
The barley market moved from the 80s when there was some 600 million bushels, down to the 200 million bushels of barley in the system today. Lots of feed barley was used in the 80s - and not much contracting.
Today, the vast majority of the barley market is driven by the need for malt.
Barley production this year will probably be 15 percent below what the U.S. produced in 2015.
Idaho, Montana and North Dakota are the biggest barley producers, and the most variability in production is in North Dakota.
Why? When the barley industry needs more acreage, they go to North Dakota because farmers there have more choices in crops they can grow.
There probably won’t be a surprise in barley markets this year, which would lead to higher prices, unless the weather changes and soybean and corn production is down.
Barley usage is shifting but not the total bushels.
What could make barley usage change in future? Ten years from now malt industry may expand due to craft brewers, and the U.S. may be able to sell into China.
In the spring of 2016, because of carryover stocks, malting companies wanted less acres and very few contracts.
What that means is there are fewer contracts and producers will be looking to sell barley in the spot market - more bushels that are not priced.
But Olson cautioned producers to not panic.
“Prices are extremely volatile in the summer. Watch the weather because the markets are,” he added.
Olson also advise producers to sell like a marketer, not a producer.
“When making marketing decisions, think like a marketer not a producer, because it is smarter,” Olson added.
07 August, 2016
