Feed weekly outlook: Wheat stocks should limit barley’s further upside

MarketsFarm — Feed barley bids in Western Canada remain strong, although ample wheat supplies should limit the upside heading into the new growing season.

Feed barley in the Lethbridge region of southern Alberta is currently trading at around $305-$310 per tonne, according to Jim Beusekom of Market Place Commodities.

Prices for delivery later in the spring, at $310-$315, have come off their recent highs of $325-$350 per tonne, he said.

While supplies are tightening, nobody is running out of barley, he said.

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In addition, “feed wheat is fairly competitive on a per tonne basis against barley… Basically every class of wheat, other than durum, will price as feed wheat into Lethbridge.”

The prospect of corn imports is another limiting factor for barley prices, although Beusekom noted corn was not displacing barley to any extent yet.

“For the price of barley to go up, it has to go through a bunch of feed wheat first,” he said, adding that feedlots won’t ever switch to a full feed wheat ration but could up the percentages of wheat being fed.

The new crop is still some ways away, but market attention is turning to the upcoming growing season. New-crop barley bids are down by about $1 per bushel from current levels.

Beusekom expected the high old-crop barley prices would lead to an increase in acres sown to the crop this spring. The extent of any increase in area remains to be seen, as many other crops also pencil out favourably.

“The only place (increased barley acres) can come out of is wheat, as every other major commodity is equally as strong as barley,” he said.

As a result, a modest acreage increase and average yields may not be enough to change the tight supply situation in barley — especially if Chinese export demand remains strong.

Weather conditions through the growing season and their impact on yields will also be an important factor in determining the price direction going forward.

— Phil Franz-Warkentin reports for MarketsFarm from Winnipeg.

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