Canada barley trade losing ground to Argentina

Reuters / Canada’s barley exports have dwindled to a fraction of their former might, as Argentina muscles in on trade and domestic cattle feedlots offer farmers better prices than exporters.

Through March 25, Canada was on pace for exports of 1.3 million tonnes in 2011-12 similar to the past two marketing years, according to Canadian Grain Commission data. Those three years have recorded the lowest Canadian barley exports in at least the last three decades, except for the 2002-03 drought year.

“Over the long term, (the decline) is about just far more competitors coming into the market,” said John Pauch, coarse grains analyst for Agriculture and Agri-Food Canada, the federal farm department.

Two years ago, Australia overtook Canada as the top shipper of malting barley, used in brewing, according to International Grains Council data. In total barley trade, Canada looks to slip behind Argentina this year to sixth place.

Argentina’s barley output rose 38 per cent to 4.1 million tonnes in the 2011-12 harvest that finished in January.

More than half of that total is destined for export, with Argentina expected to ship 2.5 million tonnes this year, more than double Canada’s total, according to IGC.

While Argentina has made inroads in Saudi Arabia — the world’s biggest barley buyer — Canada’s barley exports there are down 50 per cent from August through January and look to fall far short of the five-year average, Statistics Canada data shows.

In the past year, domestic feed prices have regularly beat export values, and crops in other countries have avoided weather-related disasters that can force importers to pay a premium, said Bruce Burnett, director of weather and market analysis for the Canadian Wheat Board (CWB).

Canadian barley exports could rebound in 2012-13, partly because there will be more players in the market, said Alberta-based agriculture analyst Ron Frost.

“I believe there will generally be a pickup in export activity, which only makes sense when you have a half-dozen companies out there developing relationships and putting deals together,” Frost said. “As opposed to just one entity, CWB, that may not have always been interested in a small 20,000-tonnes deal with a country or party that they did not have an ongoing relationship with.”

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