E-Malt.com News article: USA: Barley prices continue their downward slide in response to lower prices for other grains

Prices for both feed and malting barley classes continue to slip in response to lower market prices for corn, wheat and soybeans, according to Marvin Zutz, executive director of the Minnesota Barley Growers Association, Farm & Ranch Guide reported November 8.

Zutz also noted that most export orders are now filled, but there remains a strong interest in U.S. feed barley in many parts of the world where cropping issues have created short supplies.

“Parties in both Japan and Europe continue to be interested in U.S. barley,” Zutz said. “That's mainly due to the GMO issue with corn and their need for feed grains.”

Most of the maltsters now have their contracts for malting barley out for growers to review. Producers appreciate this, Zutz said, since it gives them more time to formulate their 2008 cropping plans. In the past, contracts usually weren't issued until January or February of the growing year. The malting barley contracts also have a new feature this year - variable pricing.

“Anheuser-Busch is leading the way this year and they are offering contracts that are tied to wheat future prices,” Zutz noted. “This will make the contracts more competitive with the other commodities and should help in buying acres for barley.”

But prices won't be the sole determining factor as farmers plan their crop rotation for next year, Zutz noted. In addition, input costs will play a large role in the cropping plans and barley should come out quite well when costs are factored in.

“It's getting scary out there, with costs going higher and higher and more risks being placed on the grower,” Zutz said. “A report was out today and anhydrous and urea prices are at record levels, crude oil prices continue to make record highs, and even items like the premiums on federal crop insurance are higher due to the higher price elections growers are needing to make.”

Zutz noted that with higher oil prices, things like transportation costs will also continue to increase which will end up cutting into a grower’s bottom line.

“As a result, even though corn, soybeans and wheat may still pencil out with a higher gross income, their advantages disappear when you start subtracting costs,” he said. “ Recent crop budgets indicate barley will be one of the more profitable crops to grow next year because of the lower input costs. And I think we will be seeing growers base more of their cropping decision this next year on input costs.”

But, even given the higher profit scenario for barley, Zutz doesn't expect a huge increase in acres planted to barley next year.

“Malting barley still remains a specialty crop, and for that reason I don't expect the acreage to increase dramatically resulting in a large surplus of barley at the end of the next growing season,” he said.

This past year's barley crop in northwestern Minnesota was high in quality, but the yields were only average, which was disappointing to most growers, Zutz said.

“We had a lot of rain early in the summer and barley doesn't like to have its feet wet,” Zutz explained. “So the crop wasn't as heavy as we were expecting at harvest time. Almost everyone reported excellent quality, but only average yields.”

Prices have eroded from their record highs set about a month ago and are now averaging around $4.50 a bushel for both feed and malting grades in northwestern Minnesota, according to Zutz.

A check of elevator barley prices on the smallgrains.org website indicated those price levels to be the case in North Dakota as well. Feed barley prices were in a range of $4.10 to $4.65 a bushel, with most elevators reporting around a 50-cent drop in the past two weeks, although feed barley prices were off 80 cents in at least one location.

The retreat in malting barley prices was as little as 30 cents a bushel to as much as 60 cents, with board prices ranging from $4.45 to $5.50 a bushel.

A few locations were quoting the same price for both feed and malting classes, but the differential in most locations was 50 to 60 cents a bushel.


09 November, 2007