USA: Feed barley prices strengthen while malting prices remain steady

Talk of increased export demand for feed barley and the need to keep prices somewhat close to malting contract figures caused feed barley prices to move upwards in several locations during the past two weeks, while cash malting prices remained unchanged, according to Farm & Ranch Guide, November 23.

“We had about a 25-cent move up in the last couple weeks and that was just to stay competitive with the malting barley,” Randy Brag with Valley Grain Services in Casselton, N.D. said. “There are still buyers out there looking for malting barley.

“The big question is how much barley is left out in the country? We have had a lot of movement of barley at these prices. And at these prices, farmers should be letting it go. What makes me nervous, as a buyer and merchandiser, right now is what's left out there.”

Two export situations also applied upward pressure to barley prices during this period.

First was an announcement of the sale of 27 million bushels of Canadian malting barley to China. Steve Edwardson. head of the N.D. Barley Council, noted this should help keep U.S. prices strong, at least in the short term.

In the past few months Japan has been purchasing a large amount of barley, Edwardson said, and now a recent report from the U.S. Grains Council indicates they expect more grains being exported to Australia, as that nation continues to struggle with drought conditions. Latest estimates are trimming the expected Australian barley crop by 20 percent.


Mike Callahan, USCG director of international operations, said the Australian Bureau of Agricultural and Resource Economics (ABARE) recently reduced the country's barley production to five million tons from the previous forecast of 5.9 million tons.

“This announcement greatly improves the prospect for U.S. feed grains and co-product exports to Australia,” Callahan said. “The Council identified Australia as a priority market for U.S. feed grains several years ago and began developing strong trade and industry contacts down there.”

However the support that the barley market has found within the last few days has surprised Brag.

“When the feed barley market started falling back, I was surprised it just didn't keep on falling. It could have eventually gone down as far as three bucks a bushel. But it seems like we have run into a spot where we have some support, but we still have a thing called sticker shock.”

That element is having a larger impact on the domestic market than on the export side, because of the weakness of the dollar, Brag noted.

“And now we have even higher prices, so once again the grain buyers are being hit by a double whammy. But people and pets have to eat, so, reluctantly, they are paying the prices.” (Brag's business processes barley and produces a hull-less product for the pet food industry).

The efforts of the malting industry are also seeing some farmers sign malting barley contracts, according to Brag.

“The contracts they are offering, which are tied to the spring wheat futures, are pretty lucrative,” he said, “with some contracts going for between $5 and $5.50. And I have had some producers say that is very competitive against beans and corn.

“And let's be honest, with new crop feed barley at $3.80 to $4, a lot of growers might not sign a contract, and if we have any cropping problems we could have $6 feed barley again next fall,” he continued. “Why sign a contract? Play the market. That's the other option in this thing.

“I think what the smart guys are doing is just pricing a little bit of their crop at a time,” he added.

In regards to current cash prices, Brag pegged the average feed barley price in the state at $4.60 to $4.80 a bushel. And the maltsters are still looking to pick up some barley on the spot cash market which is supporting prices in the area of $5 to $5.25 a bushel on average.

Cash elevator prices listed on the smallgrains.org website indicated malting barley prices were unchanged at all locations, with prices varying from a low of $4.45 to as high as $5.50 a bushel, with most in the $5 range.

Although steady in a few isolated cases, for the most part feed barley prices advanced from a dime to 20 cents in the past two weeks, with prices ranging from $4.10 to $5 per bushel. Some locations are still quoting the same price for both and feed and malting barley classes, but most elevators have a 50 to 75-cent differential between feed and malting prices.

28 November, 2007