E-Malt.com News article: USA: Barley markets continue to skyrocket

In trying to describe the latest activity in the barley markets, Randy Brag from the Valley Grain Services in Casselton, N.D., said he is almost speechless, according to Farm & Ranch Guide, September 16.

“We are well into record high prices for both feed and malting barley and, as Brag puts it, “No one can really predict what's going to happen next. This is no man's land.”

“Prices could go up a dollar so fast or we could drop a dollar just as fast. This is as speculative as I have ever seen barley,” he continued. “Barley normally moves a nickel every once in a while, but nothing like this. To a lot of us right now this market makes no sense.”

The export market for good feed barley seems to be driving the markets at this time, Brag noted. He pointed out that a lot of factors are coming together at the same time to give support to the market.

Those market factors include a smaller crop than what was first expected in many areas of the U.S. and Canada, harvesting problems in some prime barley growing areas, harvesting difficulties in Canada, strong export demand and a need to fill vessels that are either at port or soon to be coming into port, and a weaker U.S. dollar.

“With the current value of our dollar, we are very competitive on the world market for a change,” he said. “Everything is coming together to make this an incredible run.

Brag has been involved with the barley industry for 30 years and when the prices hit the $3.50 mark a few months ago he thought those were record highs.

“It is really a shock to see what feed barley prices have done - especially since feed barley prices are so over-priced compared to corn right now,” he said. “But, we don't have a domestic market setting the feed barley prices right now; instead, the export forces are driving the market. The domestic buyers aren't going to purchase feed barley at these prices, they are going to use something else.”

With good commodity prices across the board, Brag has heard rumours that the maltsters are about ready to start offering malting barley contracts for the 2008 growing season, which would be at least four months earlier than normal. If indeed contracts are being put forward at this time, Brag feels it is in response to their concern about wheat and the record high prices being offered for that crop.

“They want to keep barley acres in North Dakota and they want to compete with wheat,” he explained. “They want to give the farmers something to look at because a lot of the farmers are selling new crop wheat right now, and the maltsters want to give the growers some options to sell some new crop barley and hold acres. And one way to get acres is with high prices.”

Brag noted that there is good movement of barley from the farms to the elevators at this time, not only because of the record high prices, but also the need to open up some bins on the farm for the upcoming corn harvest.

“I think these guys are smart by cashing in their barley,” he said. “The biggest thing is to find a spot to put it.”

These record high prices were evident on all the elevator board prices listed on the smallgrains.org website. All local elevator cash prices had malting barley pegged at a minimum of $4 per bushel, with feed barley trailing by just a few cents, if not equal to malting prices.

Malting barley over the past two weeks climbed from 40 to 55 cents a bushel, with prices in a range of $4 to $4.47 per bushel. Meanwhile, the spread for feed barley was $3.45 to $4 a bushel, which represented a price increase of 25 to 75 cents per bushel from the last report.

With several elevators reporting a $4 price for both feed and malting barley, the difference between the two classes narrowed to 30 to 55 cents in a few locations and averaged in the area of 20 cents per bushel.


19 September, 2007