USA: Barley prices remain steady
“The barley markets are hanging in there.” That was the assessment of Kelly Kotowicz of the Alvarado Farmers Elevator in Alvarado, Minn., regarding the state of the barley markets, The Prairie Star published December 6.
The feed market is being supported by continued export demand which is due to a lower stock pile of barley worldwide. And the malting strength is coming from the maltsters' desire to buy up as much of the 2007 crop as they can, because of its good quality and lock in acres for the 2008 crop.
“The malting prices are being driven by a combination of trying to get some acres in the ground for next year and, with the quality of the barley this year, they are trying to buy up some extra barley that's out there,” Kotowicz said.
Even though the cash prices for malting barley are quite attractive at this time, he indicated farmers might have a hard time moving barley at this time, since the pipeline is pretty much filled up.
“It will probably be a later delivery time for those wanting to move barley, and that time could go out into January or February,” he said.
As far as the 2008 crop, he indicated that even though the malting barley contracts are out two or three months ahead of when they normally come out, farmers are waiting to commit acres at this time.
“With the wheat and bean prices the way they are we are having a tough time getting contracts signed. They are not coming in as fast as we had hoped,” he said.
But he's expecting more contracts will be signed once farmers do a little pencil pushing and look at input costs.
“I think guys should take another look at barley just from the fertilizer issue,” he suggested, “especially from what I have been hearing as to what fertilizer prices might be this spring. There is less input costs into barley, especially at those higher fertilizer prices.”
On the income side, these higher contract prices being offered also make barley more attractive and there is an “Act of God” provision in the contracts, at least those being offered by International Malting, Kotowicz's contracting company.
Some farmers are also reluctant to sign a contract because they believe that in 2008, like in the past two years, the spot cash market for malting barley will be better than the contract price, he said.
“I think the total barley acres are going to be pretty close to what we had last year, but we will probably see more open market barley acres,” he said. “The higher contract prices now being offered will help lock in some of these acres, but at this time the guys just don't know what they want to do. We have a lot of crops out there that cash flow comparable to most things, and I think the final determination might be made on the input cost factor.”
Looking at the worldwide picture for barley, the latest USDA Feed Grains report raised barley exports 25 million bushels this month. This increase is due to strong global demand and current commitments, especially to Japan. Barley imports are expected to increase by 5 million bushels this month, which will raise the total supply figure to 301 million bushels.
On the domestic usage side, feed and residual use of barley has been lowered 10 million bushels this month and food, seed and industrial use has been rolled back 5 million bushels.
The USDA raised the expected prices farmers will receive for barley to $3.55 to $4.15 per bushel, compared to the projected $3.20 to $3.80 last month.
Looking at the global barley crop, the continued drought in Australia has again forced them to ratchet back expected production another 0.7 million tons this month for a projected total of 5.5 million tons. On the positive side, Ethiopia has boosted the figures for their barley crop.
World coarse grain trade for the 2007/2008 trade year is projected to reach a record 119.4 million tons, up 1.75 million tons this month. Of this total, world barley trade is expected to reach 15.4 million tons, up 0.4 million tons from last month's expectations.
This global supply situation, plus relatively high contract prices being offered by the maltsters kept pressure on the cash barley markets for both feed and malting classes. A check of local elevator prices on the web site small grains.org indicated prices for the period were mostly steady, with an increase noted in certain locations.
Feed barley prices were trading in a range of $4.10 to $5 per bushels, with prices 20 cents higher in a handful of locations. Otherwise feed barley prices were steady with an average of around $4.60 per bushel.
On the malting side, again prices were steady with a few locations reporting prices up to a quarter higher. Spot malting barley prices were as high as $5.70 a bushel and as low as $4.45, with an average price of $5.15.
Many elevators were quoting the same price for both feed and malting classes, but some were offering a price differential as high as 70 cents a bushel, with an average differential between feed and malting classes of 40 cents.
07 December, 2007
