Farmers in Western Canada are less than enthusiastic about early new crop malting barley prices.
Rahr Malting Canada Ltd. in Alix, Alberta had been offering between $4.25 to $4.50 (farm gate) for 2009-10 malting barley but those prices were met with minimal interest from farmers, said Kevin Sich, the barley manager for the Minnesota-based malt company.
“The general consensus from what I’m hearing is that $5 a bushel would light the world on fire in Alberta. That is the price target that everyone tells me but I think we could get some guys to come in at $4.75 a bushel. I think if they sat back and thought about it they would consider that price as well,” Sich said.
Kevin Hursh, a respected agricultural commentator who farms in southwest Saskatchewan, said one company he had spoken with suggested their malting barley bids will come out in the C$4.75-to $5.25-a-bushel range.
“For the current crop year there was a much higher price regime,” said Hursh, citing Canadian Wheat Board CashPlus bids basis delivery of $6.50 a bushel at a local elevator.
This year, his understanding is that the same local elevator will allow only farmers who participated in CashPlus last year to lock in less than 30 bushels an acre at a price of roughly $5 a bushel.
While maltsters usually don’t like carrying supply over into the new crop year because germination typically drops, they are hesitant to do a lot of business on the sourcing end this spring without having locked up business with the end-user, Hurch said.
Sich said Rahr Malting is going to hold off on further new-crop malting barley bids until all parties come closer together in terms of price targets.
“The whole grain industry is quiet. Nobody is really posting a price, everybody is just going back and forth, saying, ‘Well, what would you sell me barley for?’ and then it’s, ‘Well, what would you buy barley for?’ and we just can’t get everybody on the same page.”
Some elevator companies that don’t have new crop prices out yet said they won’t finalize their 2009-10 malting barley bids until late February, after the Canadian Wheat Board, or CWB, releases its first set of price projections for the new crop year.
However, at Crop Production Week in Saskatoon, Saskatchewan last week, the Canadian Wheat Board’s presentation on January 16 already hinted at what might be in store for 2009-10 malting barley markets.
Bruce Burnett, director for weather and market analysis for the CWB, forecast 2009-10 global barley production at 149 million tonnes, down only slightly from 150 million tonnes in 2008-09.
Global malting barley trade for 2009-10 was pegged in Burnett’s presentation at 4.3 million tonnes, up only slightly from 4.1 million tonnes in 2008-09.
Hand-to-mouth buying, high production and soft feed prices will weigh on barley values but a drop in Australian malting barley production could help to offset that pressure, the presentation said. Prices should remain historically high through 2009.
For Canada specifically, lower production in 2009-10 than in the current crop year could be favourable for farmers whose malting barley is selected.
In 2008-09 there was so much high-quality selectable malting barley produced in Western Canada that many producers so far have had to sell their supplies as feed.
It is unlikely though that farmers will see such a good barley crop in back-to-back years, which could support prices moving forward, noted Rod Green of Central Ag Marketing.
With that in mind, Green suggests that growers whose malt-quality barley was not selected in 2008-09 hold on to it until the July/August/September timeframe.