E-Malt.com News article: USA: International barley situation affects US barley prices indirectly - expert

With a vast majority of the U.S. barley production grown under contract to the maltsters, growers sometimes overlook the fact that the international barley situation also plays a role in prices, especially in the area of feed barley prices, Farm & Ranch Guide reported on June 24.

“There is an indirect influence on local prices based on what happens internationally,” said Frayne Olson, NDSU Extension grain marketing specialist. “And all of these markets are kind of inter-related.”

In an effort to outline the current price situation, Olson summarized the production potential of the major barley producing regions of the world and then touched on the estimated demand in some of the major importing countries.

In terms of production – in Canada, the major malting barley regions, which includes the provinces immediately north of the tri-state region of Minnesota, North Dakota and eastern Montana, are experiencing good growing conditions, with about a 10 percent increase in planted acreage. However, the main feed barley production areas in western Saskatchewan and Alberta, are currently under moisture stress, putting the barley crop under pressure.

Crop conditions in Ukraine are looking good right now, after rains lessened a concern over dry conditions at planting time, and the European Union’s barley crop, in general, is looking very good.

The demand side of the equation – according to Olson, the big surprise in the export market over the past year has been the demand for feed barley in China. This came about with the MIR-162 problem with U.S. corn that brought about the import ban on corn and later dried distillers grain from this country.

“To back-fill that feed demand, they switched and the Chinese feed mills started buying U.S. sorghum and barley,” Olson said. “Since then the restrictions on corn have been lifted and they are starting to buy a little corn, but not like they did before. They have gotten use to using barley and sorghum and have decided in many cases to keep using these cheaper priced imports instead of corn.”

That is the international barley situation at this time, and as Olson noted, it does have an impact on the local barley prices in the US.

“We are really talking about the feed barley segment, but those prices put a base and changes the psychology of the barley market,” he said. “So there is a spill-over effect – an indirect relationship as to what happens to our prices locally.”

Taking a look at the local situation, Olson said the reports he has heard indicate the barley crop is looking very nice. The key issue now is to make sure steps are taken to control leaf diseases and scab.

“I’ve only seen one or two new crop malt barley cash prices and they are pretty low,” he said. “Right now the old crop malt barley prices were in the area of $4.75 a bushel. The place I did see a new crop bid was around $3.20, which indicates the market is expecting a good crop this year.”

A check of local elevator boards for spot cash feed barley prices show prices have softened about a quarter in the last two weeks to an average of around $2 a bushel.

The June USDA World Agriculture Supply and Demand Estimates report increased the feed barley exports estimate for the current marketing year by 400,000 bushels, but the estimated price paid to farmers at the farm gate remained the same at $4.10 to $4.90 a bushel.


26 June, 2015