Canada: Barley use to increase 10% in 2015-16

For 2015-16, Canada’s total domestic barley use is forecast to increase by 10% to 6.1 million tonnes which is below the previous five-year average. The modest usage increase is a function of increased feed use while industrial use remains unchanged, Agriculture and Agri-Food Canada said in its April report.

Exports are forecast to decrease by 23% to 1.9 mln tonnes due to lower world feed barley trade and trend malt barley demand.

Barley carry-out stocks are expected to increase by 31% to 1.6 mln tonnes which is higher than the previous five-year average.

The Lethbridge cash feed barley price is forecast to increase from 2014-15 due to the tight total supply, good domestic feed barley demand and trend demand for malt quality.

Over the past month, the Lethbridge price softened slightly in spite of long-term seasonality. However, by the beginning of April, prices increased slightly. Compared to the base Lethbridge cash price, this crop year’s feed barley basis has been better than the previous five-year average in Alberta and Saskatchewan. However, in Manitoba the feed barley basis has been slightly below the previous five-year average but higher than the previous three-year average. Malt barley pricing on the Canadian prairies has been similar to last crop year.

The USDA Grain Stocks report showed March 1 US barley stocks 16% higher than 2015 due to the large increase in seeded area in 2015. Of the main barley producing states in the US, Montana is the only state reporting lower barley stocks with a decline of 24% in on-farm stocks while commercial stocks are up 8%.

The world feed barley markets were a little softer this past month as good coarse grain supplies of all kinds continue to be a drag on prices, whereas malt barley prices were again steady. The Chinese government’s announcement that it would to end their corn-stockpiling program and let their domestic corn price float with market conditions has world feed traders nervous. Due the artificially high domestic corn price and favourable import tariffs in China, coarse grains such as barley enjoyed a period of higher than average Chinese imports. However, with more than a year worth of corn in stock China will sharply reduce its feed imports at least in the short term. With continued growth in China’s brewing industry, barley for malt imports should remain steady, analysts believe.

For 2016-17, the area seeded to barley in Canada is forecast to increase by 2% from 2015-16, to 2.7 mln ha, due to good barley prices especially if it is selected for malting barley.

Production is forecast to increase 2% to 8.4 mln tonnes due to the higher area. With the slightly higher production and a recovery in carry-in stocks this will allow total supply to increase by 5% to 10.0 mln tonnes, Agriculture and Agri-Food Canada said.

Total domestic use is forecast to increase by 2% due mainly to slightly higher feed use in cattle and hog production. Exports are forecast to increase by 5% to 2 mln tonnes due to the lower world supply and steady malt barley movement.

Despite higher total use and exports, barley carryout stocks are forecast to increase by 16% to 1.9 mln tonnes, above the previous five and ten-year averages.

The Lethbridge cash feed barley price is forecast to decrease from 2015-16 due to the higher supply of feed barley and softer US corn prices.

Barley production in North America is expected to decrease for 2016-17 as higher production in Canada is more than offset by lower production in the US. The USDA Prospective Plantings report showed that US barley area for 2016 is estimated down 12% from 2015, which would be the fourth smallest seeded area on record. Including 2016, all four smallest US barley crops on record have occurred in the last seven seasons. Of the three largest barley states, only Montana is showing an area increase of 4% which would be its highest level in 12 years. This may be related to its sharp decline in on-farm barley stocks. North Dakota, the largest barley producing state, is showing a 29% decline in area for 2016. However; its barley stocks are 51% higher than in 2015 and company offerings for 2016 malt contracts were down significantly.

14 April, 2016