Canada: Total domestic barley use forecast to remain unchanged this season

For 2017-18, Canada’s total domestic barley use is forecast to remain unchanged (at 5.888 mln tonnes) as lower feed use is offset by higher industrial use, Agriculture and Agri-Food Canada said in its February report.

Total barley exports are forecast to increase by 14% to 2.65 mln tonnes due to steady total supply and lower world supplies.

Barley carry-out stocks are forecast to decrease by 25% to 1.6 mln tonnes and remain slightly above the previous three and five-year averages.

The Lethbridge in-store feed barley price is forecast to increase due to the tight total barley supplies and the decline in the supply of other domestic feed grain substitutes.

As of December 31, Canadian barley stocks were 6% lower than 2016 although they were still 2% higher than the previous five-year average. Commercial stocks increased by nearly 50% from 2016 indicating a faster pace into the elevator and end-user system. For the main barley-producing region, the Prairie Provinces, on-farm stocks are down 8% from last year but are still 3% higher than the previous five-year average. Manitoba showed the largest year-to-year decline as corn production continues to expand in that province.

For the past two months the Lethbridge cash barley price has been hovering around C$220/ tonne (t) after starting the crop year below C$200/t.

The feed use of barley to-date is behind last years’ pace due to the very tight price spread between feed barley and wheat and higher than average imports of US corn and DDGS entering the Prairie feedlot system.

World FOB feed barley prices strengthened with the higher US corn futures prices and a softer US dollar. Argentina remains the feed price leader whereas prices from Australia continue to strengthen for feed and malt. To-date the world average malt price continues to strengthen to spread levels not seen since the 2010-11 crop year. There were malt price spikes in the fall of 2014 and the fall of 2016 but these were short lived. For North America, the higher than average supply of malt quality barley has limited the upside for prices.

For 2018-19, Canada’s barley-seeded area is forecast to increase 7% from 2017-18 (to 2.5 mln ha), rebounding from record low seeded area.

Production is forecast to increase 5% to 8.3 mln tonnes due to the higher area and a forecasted average total yield.

Despite higher production, lower carry-in stocks will cause total supply to decrease by 1% to 10.0 mln tonnes, the farm ministry said.

Total domestic use is forecast to increase by 1% to 5.95 mln tonnes due to higher feed and industrial use.

Exports are forecast to decrease by 11% to 2.35 mln tonnes due to higher world supplies and a return to normal trade patterns.

Barley carry-out stocks are forecast to increase by 6% to 1.7 mln tonnes and remain close to the previous five-year average.

The Lethbridge cash feed barley price is forecast to decrease from 2017-18.

Higher barley area and production for 2018-19 is expected at the world level. For North America, high supplies of malt quality barley will weigh on prices domestically and greater world supplies of feed and malt will weigh on prices.

21 February, 2018