E-Malt.com News article: USA: Feed barley gains ground

Malt remains the primary driver behind Idaho's barley industry, but feed varieties have played a little catch-up this year, Capital Press reported August 10. After nearly a decade of steady declines relative to malt barley, feed varieties finally gained some ground.

Feed varieties account for 31 percent of all Idaho barley acres this year, up 6 percentage points from 2006. The change is all about price. "My costs to produce a bushel of barley keep going up, and the highest bidder is going to get the barley," producer Timm Adams said last week during harvest near Rupert.

Adams increased his feed barley acreage this year about 20 percent and reduced his malt barley acreage by a corresponding amount.

"You're seeing a lot of demand from the dairy feed sector," Adams said. "There are a lot of dairy cows here in the Magic Valley, and they have to be fed every day."

Malt varieties reached a record high 75 percent of the total Idaho barley crop last year before slipping back to 69 percent this year.

Harrington, a malt variety, is the top variety in Idaho with 18.4 percent of total barley acreage.

AC Metcalfe, another malt variety, is second with 15.9 percent of overall acreage, and Baronesse, a feed variety, is third with 12.1 percent.

Malt barley contracts normally pay a premium over feed barley, but last fall, as corn prices soared to $4 per bushel, feed barley futures contracts actually exceeded malt prices.

Companies such as Coors and Anheuser-Busch have in turn been forced to raise prices to stay in the game.

Adams said his malt contracts are paying about 8 percent more this year than last.

Industry leaders aren't sure whether this year is an anomaly or feed barley will continue to post gains at the expense of malt acres.

"It depends on the price of corn," said Dan Mader, a farmer from Genesee and chairman of the Idaho Barley Commission.

Corn is the big dog wagging the feed grain tail, he said.

If corn prices stay high, there's a good chance that feed barley acreage will keep growing.

"I think we'll see more feed barley than we have the past few years," Mader said.

But people are still drinking beer, and industry leaders expect malt barley to continue to comprise the majority of Idaho barley acreage.

"There's no decline in malt barley demand," IBC Administrator Kelly Olson said. "I would predict that next year we will return to the trend that we've seen over the past several years."

Harvest is still under way, so it's a little early to know what the supply-demand situation will be over the coming marketing year.

But it's clear that dryland malt barley didn't fare well across the parched western U.S. this summer. That could boost open-market malt barley prices this fall and force malt companies to be more aggressive in contracting acreage for next year's crop, Olson said.

So far, open-market malt barley prices have held steady and companies are taking a "wait and see" approach, she said.

"By late September, we will have a better indication of supply and demand," Olson said.


15 August, 2007