(Resource News International) –– Feed barley bids in Western Canada should come under pressure during the harvest period, but are expected to show some strength farther out as domestic buyers will need to compete with the higher-priced export market.
“The feedlots don’t need a lot of grain today,” Jim Beusekom of Marketplace Commodities at Lethbridge, Alta. said, adding that “the cattle are late coming into the feedlots because we’ve had so much grass and the cattle are still out in the pasture.”
Prices in the key Lethbridge feeding area would hover in the $155 to $165 per tonne range during the harvest period, before strengthening in October and farther out.
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Once the cattle numbers start to go up in the feedlots, “we anticipate the market will go up,” said Beusekom.
Prices, he said, would need to increase in order to compete against the Canadian Wheat Board, which is currently offering much better values for export feed barley. Last week, the CWB increased its pool return outlooks (PROs) for feed barley marketed during the 2010-11 crop year to $209 per tonne, from $143 the previous month.
“At some point the feed market will need to get competitive against” the CWB export program,” said Beusekom.
The CWB announced last week it had already sold 200,000 tonnes of feed barley into the export market in recent weeks due to strong international demand. The CWB had been largely absent from the export market in recent years due to firmer domestic prices.
Beusekom said end-users are currently not willing to pay up to match the values offered by the export market, but they will need to do so at some time as barley is the main source of starch in cattle rations.
“No-brainer”
However, ample supplies of other feed ingredients will limit the upside in the domestic barley market. Beusekom said corn DDGs (dried distillers grains) from the U.S. are currently trading at a similar price to barley, so feedlots are maximizing their DDG usage at 25 per cent.
“Anytime corn DDGs trade at the same value as barley, it’s a no-brainer for feedlots to push it to the max they can,” he said, adding that feedlots will pay up to 25 per cent more for DDGs over barley.
Feed wheat and pulse crops with high dockage could also help keep prices down for the livestock feeders, but Beusekom noted quality and availability of those crops will still depend on the harvest.
