Canada: Global glut of malting barley limiting Canada’s export opportunities

A global glut of malting barley is limiting export opportunities for the ample Canadian crop and that is driving down prices, the Western Producer reported on February 16.

Australia harvested 11 million tonnes of barley in 2016-17, which is a record and 28 percent more than the previous year, according to an estimate by the U.S. agricultural attaché.

Australia is one of the world’s largest exporters of barley. It typically accounts for 30 percent of the malting barley trade and 20 percent of feed barley trade.

That share is expected to grow this year. The attaché forecasts 7.4 million tonnes of exports or 34 percent more than last year. Typically, half of those exports will be feed, one-third malting barley and the remainder shipped as malt.

“Exports of malting barley could rise by one-third to two million tonnes,” stated the report.

This week, the Australian government forecaster pegged barley production even higher, at 13.4 million tonnes.

G3 Canada weather and crop specialist Bruce Burnett said the massive Australian crop is dominating export markets.

“That’s essentially driving the international malting market right now and will for the foreseeable future,” he said.

Canada was on pace through the first half of the marketing campaign to meet Agriculture Canada’s barley export projection of 1.9 million tonnes but Burnett expects sales to slump in the second half and carryout to blossom beyond the estimated two million tonnes.

Brian Otto, past-president of the Western Barley Growers Association, said Canada has ample supplies of malting quality barley.

“I think last year was an exceptional barley crop, there is no two ways around it,” he said.

Quality held up nicely despite the wet finish to the growing season. The U.S. also harvested a good quality crop with record yields.

North American maltsters have a plethora of malting quality barley to choose from, which is why prices have fallen.

New crop bids for the 2016 crop started at C$5.50 per bushel in Saskatchewan in May. By November the cash price at elevator had fallen to C$4.45 to C$4.80 per bu. The cash price last week was C$4 to C$4.25 per bu., according to Prairie Ag Hotwire.

Otto said there is a substantial risk in storing malt barley from one year to the next because the longer it is stored, the more the germination suffers and it can lose its malt status.

“As a farmer myself, if it’s not going to be used for malt, it will go into the feed market,” he said.

But there is a substantial discount of C$1.25 to C$1.80 per bu. for selling malt barley as feed in Saskatchewan. Feed barley prices have backed off in recent months due to the glut of feed wheat on the market.

“What it all boils down to is the need for cash flow,” said Otto.

New crop 2017-18 malting barley prices are lower than the same time last year and maltsters are not looking to contract as many acres as last year because of the large supply of malt barley.

“What we’re hearing is some of the maltsters are going to their more reliable producers and people who have been in and out of the market are finding more of a challenge to try and get malt contracts,” he said.

The situation is worse in Montana where there are reports that Anheuser-Busch and MillerCoors are offering between 20 and 60 percent fewer contracts for the 2017-18 crop year, due to the oversupply.

Otto said maltsters should not get too confident about the good supplies because a lot of the malt barley surplus could work its way into the feed market before the next harvest.

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