CNS Canada — Concerns about weather dictating the quality of malt barley is keeping producers from seeding the crop this year, one industry participant says, while weak prices offer no extra incentive.
“Acres are definitely going to be down, because of the fear of getting feed barley, which is horrendously low-priced,” said Rod Green of Central Ag Marketing at Airdrie, Alta.
Statistics Canada is set to release its acreage estimates for principal field crops on Friday.
Average trade estimates collected by CNS Canada ahead of that report range from 4.4 million to 6.4 million acres.
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That compares with the 6.4 million acres seeded in 2016-17, according to Statistics Canada. Those figures account for all types of barley grown.
Rain in Western Canada last fall led to an overabundance of feed grade grains, lowering quality of barley and pushing up supplies, which means weaker prices.
Prices for malt are low as well, further dissuading producers from growing it this year.
Canada’s crop is bigger than the country needs, while heavy production in competing growing regions cuts into export demand, Green said.
Australia grew a massive crop in 2016-17 and is exporting heavily to China, with estimates saying sales — of all types of barley — could double last year’s exports.
That cuts into the amount China is buying from Canada. “So consequently there’s a lot of malt barley on the farm,” Green said.
The U.S. has had two big crops back-to-back, he added, with prices below Canadian values, which further cuts into demand.
“It’s a combination of an abundance of supplies and lower world prices, and that’s pushing our domestic prices down,” he said.
However, the craft brewing industry is providing a small, but strong spot in the Canadian malt barley market.
“That’s a steadily expanding market, that’s the positive news in the malt business,” Green said.
Spot prices for malt barley in Western Canada are between $3.50 and $5.10 per bushel, while new-crop bids are between $4.80 and $5.10, according to data from Prairie Ag Hotwire.
— Jade Markus writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.
