Canada: Barley supply projected sharply downward for 2021-22

For 2021-22, Canadian barley supply is projected at 7.81 million tonnes, down sharply from 2020-21 and a record low level. This is primarily due to significant production issues during the 2021 growing season in Canada’s Prairie provinces, as well as record low carry-in stocks, Agriculture and Agri-Food Canada said in their February report.

As a result of the tight supply, demand for both domestic feed consumption and exports will be sharply lower than last year. Carry-out stocks are projected at 0.3 mln tonnes, a record low level.

According to the stocks report published by Statistics Canada (STC), Canadian barley stocks at December 31, 2021 were pegged at 3.15 mln tonnes, 44% and 46% lower than last year and the previous five-year average, and the lowest in at least two decades.

This primarily reflected the changes in on-farm stocks on the Prairies, the main barley producing region. The significant drop in barley stocks was primarily caused by the production issues during the 2021 growing season on the Prairies. Commercial stocks also decreased significantly from last year, although were slightly higher than the previous five-year average. This implies a much slower shipping pace of barley over the coming months. Of the total stocks, approximately 89% are stored on farms and 11% in commercial positions.

Total disappearance, including exports and domestic disappearance, for the August-December 2021 period decreased by nearly 25% and 5% from last year and the previous five-year average, as a result of sharply lower 2021 production. Total barley exports for the period were 7% and 52% higher than last year and the previous five-year average, mainly reflecting the changes in barley grain exports.

Exports of barley products were 11% and 15% lower than last year and the previous five-year average. However, we expect the exporting pace of barley grain will slow down drastically for the
remaining months of 2021-22, pushing total barley exports for the entire crop year down sharply from 2020-21. Domestic disappearance was 39% and 24% lower than last year and the previous five-year average, mainly reflecting the changes in domestic feed demand. Industrial use fell by 39% and 7% from last year and the previous five-year average.

Based on STC data, 2021-22 Canadian barley exports were revised higher compared to the January report, on increased barley grain exports, offsetting lower barley product exports. Total domestic use was revised lower by the same amount on reduced domestic industrial use and feed demand. Carry-out stocks were unchanged.

The Lethbridge feed barley price for 2021-22 is forecast to hit a new high of C$420/t, up sharply from the previous record of C$294/t set in 2020-21 and well above the three- and five-year averages. The 2021-22 prices are supported by tight domestic barley supplies, the decline in the availability of other domestic feed grain substitutes, robust demand and stronger prices of other grains.

Following continued strong demand of barley worldwide and higher corn and wheat prices, world FOB feed barley prices in the major barley exporting countries and regions strengthened compared to a year ago with Argentina having the highest increase, followed by Black Sea. World
FOB malting barley prices strengthened further, supported by brisk demand and feed barley prices.

For 2022-23, Canadian barley supply is projected to increase to a comfortable level, mainly reflecting the expected recovery in production on the Prairies. This is based on the assumption of a return to normal weather conditions and trend yields for the 2022 growing season on the Prairies. Tight old crop supplies, robust demand and high spot prices will prevent the 2022 barley area from shrinking too much, despite strong competition for acres from other crops. Total barley area on the Prairies in 2021 was a twelve-year high and is expected to decrease slightly in 2022, resulting in the national barley area decreasing by only 2% in 2022. With a return to average levels for abandonment and yield, Canadian barley production is expected to increase by 52%.

Domestic feed use and exports are expected to increase significantly from 2021-22, given the tight domestic supply in 2021-22 rationing demand to very low levels. Carry-out stocks for 2022-23 are projected at 1.0 Mt, increasing sharply from that projected for 2021-22 and well above the previous three- and five-year averages.

Based on expectations for a recovery in domestic barley supplies and lower US corn prices for 2022-23, the Lethbridge feed barley price for 2022-23 is forecast at C$320/t, considerably lower than the price forecast for 2021-22.

04 March, 2022