Canada: Barley use forecast to increase by 2% in 2016/17

For 2016-17, Canada’s total domestic barley use is forecast to increase by 2% to 6.226 mln tonnes due to higher feed use, Agriculture and Agri-Food Canada reported on May 25.

Exports are forecast to fall by 9% to 1.825 mln tonnes due to lower world feed barley use although malt barley trade remains similar to last year.

Carry-out stocks are forecast to increase by 56% to 2.3 mln tonnes which is a seven-year high and about one-third higher than the previous 10-year average.

The Lethbridge cash feed barley price is forecast to decrease from 2015-16 due to the higher supplies, softer US corn prices and competition from other domestic feed grain substitutes.

The Statistics Canada Stock Report confirmed a 23% increase in total supplies of barley, the bulk of which was on the Prairie Provinces where farm stocks have increased by 27% from 2016. Overall, total Canadian barley stocks are estimated to be 25% higher than the previous five-year average. In Western Canada, farm stocks in Saskatchewan showed the largest increase and were 47% higher than the previous five-year average. For Canada’s largest barley producing province, Alberta, farm barley stocks are 24% higher than 2016 and 23% higher than the previous five-year average. For 2016, forage crops were larger across the Prairie Provinces; in addition there has been strong feed grain competition from other cereals and special crops which led to lower total barley feeding.

At the end of April, the Lethbridge barley price jumped $12/tonne (t) as the Prairies experienced cool, wet April weather which slowed pasture growth and did not allow for any seeding progress. These factors encouraged end-users to hang onto barley supplies as the grain feeding season was extended.

World feed barley market prices continue to be flat as they have been for the past last three months with Argentina holding a distinct advantage in prices. Flat feed barley prices have allowed world malt barley prices to increase slightly and move above March’s crop years lows. The malt spread has appreciated to near the previous five-year average of about US$35 to $40/t.

For 2017-18, the area seeded to barley in Canada is forecast to decrease by about 8% from 2016-17 to a record low of 2.4 million hectares due to large barley carry-in stocks and abundant supplies of feed grain substitutes.

Production is forecast to decrease 13% to 7.6 mln tonnes due to the lower area and a forecast for average yields. Despite the larger than average carry-in stocks, lower production will cause total supply to decrease by 4% to 9.9 mln tonnes, the agriculture ministry said.

Total domestic use is forecast to increase by 3% to 6.4 mln tonnes due to slightly higher feed use and flat industrial use.

Exports are forecast to increase by 3% to 1.875 mln tonnes due to steady world supplies and continuing flat demand.

Barley carry-out stocks are forecast to decrease by 27% to 1.7 mln tonnes, similar to the previous 10-year average.

The Lethbridge in-store feed barley price is forecast to increase slightly due to the overall tighter supplies and the decline in carry-out stocks.

The Statistics Canada Seeding Intentions report showed a decrease of 8% in Canadian barley area due to larger year-to-year carry-in stocks, high feed grain supplies and competition from more profitable crops such as canola and wheat. The 2017 Canadian barley area is below both the previous three and five-year averages by 6 and 12%, respectively, and is over 22% lower than the previous 10-year average. From the last peak in area seeded of 5.1 mln ha in 2002-03 total Canadian barley seeded area has declined by over 50%.

For 2017, the Prairie Provinces are expected to reduce barley area by 9% but still represent 99% of Canada’s total barley area. On the Canadian Prairies total cattle numbers have decreased significantly and barley feed use has dropped by one third over the same period.

Malt barley continues to be a bright spot and remains profit competitive with many of the other cropping alternatives on the Canadian Prairies and is a factor in reducing the total barley area decline. On the Prairies, the first half of May had much warmer and drier conditions and producers quickly shifted focus to the new crop. Tiny by comparison, a slight increase in area seeded to barley is estimated for Eastern Canada. Quebec is increasing its barley area as the area seeded to mixed grain declines.

To mid-May, total North American barley seeding progress was behind the previous five-year average. The USDA forecasts an average farm gate price of US$4.85/bushel (bu) for barley. This is a decrease of US$0.10/bu or 2% from 2016-17. The price reduction is interesting given the USDA’s forecast for lower 2017 US barley production and total supplies although a sharp decline in barley feed use is expected and the vast majority of the US beginning stocks are of malt quality. US malt prices are expected to be similar to last year.

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