High Cost Of Feed Barley In Manitoba Taking A Toll On Livestock Profits

Spring flooding and a hot, dry summer prevented many Manitoba farmers from getting a decent barley crop, and now livestock feeders are feeling the pinch from tighter supplies.

Brent Swain, a grain buyer for FeedRite in Brandon, said he is offering $5.05 per bushel for top-grade feed barley, and $4.25 for high-vomitoxin samples.

It s pretty high, said Swain. A couple weeks back it was a little bit under $5, and it has slowly been climbing up.

Nevertheless, many growers may be holding onto their barley in hopes of higher prices, and Swain said so far he hasn t seen many samples.

Farther west, Adolf Doerksen, production manager at Kola Feed Mill, said he s buying low-vomi barley for $4.65 per bushel.

We re getting a fair bit, he said, adding the price was about $2.65/bu. last year.

No barley harvested

In his area of the southwest corner of the province, next to no barley was harvested as grain this year, he said. Instead, most farmers opted to make silage out of the crop.

I m thinking that the price is probably going up again in the next while, said Doerksen. There s going to be a shortage around this area for barley.

However, if reports of a good corn crop in North Dakota turn out to be true, the price of barley may dip in the coming weeks, he said.

The cost of the important livestock feed source has soared to $4.35 for lighter weights to as high as $4.60 for better quality, said Larry Schweitzer, owner of Hamiota Feedlot.

It doesn t look like it s going to go down anymore, he said.

Prices are higher in Manitoba than in Alberta, where most of Western Canada s feedlots are located even though Alberta prices are typically $40 per tonne higher. The price spread equates to the freight cost of moving it there.

With barley in short supply, and many dealers not willing to contract supplies very far into the future, feeders may have to look to other sources of energy such as corn in their rations.

That s not out of the realm here if we can t buy barley, or we can t find quality because some of the barley is pretty suspect, and corn is dropping, he said.

Price relief

If corn falls amid bearish sentiment, that could bring relief in the form of lower prices for dried distillers grains (DDGS), too.

Schweitzer s operation does a lot of backgrounding of calves from 400 pounds to 850 to 900 pounds. He said the really, really high price of calves is posing a bigger problem for his feedlot than the high price of barley.

So far, the trend upwards in fat cattle is keeping pace with rising calf prices, which tends to balance things out. But he may opt to sell more of his calves at the lighter weights, rather than as finished fats.

If we re going to be non-competitive on finishing cattle, then we ll mostly be backgrounding, he said.

Barley prices are climbing into the range where they may start hurting pork producers, said Andrew Dickson, general manager of the Manitoba Pork Council.

Feed represents about 70 to 80 per cent of the cost of finishing a pig.

Uncertain recovery

Higher prices, which stand at around $152 to $160 for finished hogs (up from $115 last year) had producers hoping they might make up for losses incurred in past years, with a potential profit margin of $20 to $30 per head.

We re carrying over a lot of debt from the last three years, said Dickson. We were hoping that with the prices we got this year and next year, we d be able to pay a big chunk of that off.

That may not happen, if barley, corn or No. 3 wheat turns out to be in short supply. If barley gets too high, feeders may put additional corn into their rations, on top of the baseline 30 per cent.

Feed grains are really prices at the edge now and it has really cut into margins. A lot of operations are just barely in the black as a result, said Dickson.

The Canadian barley crop has shrunk from about 10 million acres to 6.5 million acres in recent years, and that has created a structural problem for the hog industry in buying feed.

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Feed grains are really priced at the edge now andit has really cut into margins. A lot of operationsare just barely in the black as a result.

ANDREW DICKSON

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