MarketsFarm – Feed wheat and barley prices in Western Canada have slowly trended lower over the past few months, with prices for both grains now on par with imported corn from the U.S. into Alberta’s key Lethbridge feedlot alley.
All three grains are trading at around $410 per tonne into Lethbridge, according to Jim Beusekom, president of Market Place Commodities. He noted barley and wheat had been trading at a premium to corn, which led to feeders bringing in more corn while weighing on domestic prices.
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Beusekom estimated about 45 per cent of the cattle being fed right now are using U.S. corn, rather than barley or wheat. Last year considerably more corn was being fed, as Canada was out of grain. This year, domestic grain is there but farmers are unwilling sellers at current prices.
Farmers typically don’t want to sell while the market is coming down, which will usually lead to a bounce. “But this year is different, instead of paying up for barley when they need it, the feedlots are just switching to corn,” Beusekom said, adding “feeders don’t switch just because of price, they switch because of availability.”
From a seasonal standpoint, there tends to be a reduced feed demand in February and March as cattle are lighter, according to Beusekom. Weights, and appetites, usually pick up in the spring, but cattle on feed numbers are also down this year which he thought may limit any potential price bump.
Overall, he expected barley and feed wheat had more room to the downside and noted while canola and other commodities have posted losses of 15 per cent or more over the past month, barley was only down by five per cent.
“There’s certainly a lot more downside to it… every other commodity out there has had a correction, except for feed grains — the writing’s on the wall.”
While the 2023 crop has yet to be seeded, Beusekom advised producers to take a hard look at forward contracting some new crop, given the likelihood of bids trending lower. In addition, current pricing opportunities remain some of the strongest ever, despite drifting off their highs.
— Phil Franz-Warkentin is an associate editor/analyst with MarketsFarm in Winnipeg.
