Canada: Barley exports to drop to the lowest level in 13 years in 2016/17

For 2016-17, Canada’s total domestic barley use is forecast to increase to 6.226 mln tonnes due to higher feed use. Exports are expected to decrease to the lowest level in 13 years (1.95 mln tonnes) due to strong competition in the feed barley market. Carry-out stocks are forecast to increase to 2.1 million tonnes which is over 50% higher than the previous five-year average. The Lethbridge cash feed barley price has decreased from 2015-16 due to the higher feed grain supplies, softer US corn prices and lower world barley prices, Agriculture and Agri-Food Canada said in its July report.

Over the past few years Canadian barley exports have gone through a transformation with fewer but larger customers. For feed and malt barley grain exports, the top three export destinations now represent about 90% of total volume versus an average of about 65% previously. This is due to several reasons including some basic economies-of-scale, continued adoption of corn for feed around the world and the change to a fully open market for barley in Canada. Other factors include: the addition of Argentina and Ukraine as major barley competitors, growth and concentration of brewers and distillers and other small barley suppliers chipping away at market share.

World barley prices have appreciated over the past month and are generally following long term seasonality factors. Australia, with its record sized barley crop, had very strong exports and good domestic demand and this has reduced its supply.

Their prices have jumped in the past month and, with forecasts for a much smaller Australian barley crop, those prices should persist. Dryness across the EU and Ukraine is providing price support.

For 2017-18, Canada’s barley-seeded area is estimated to decrease 10% from 2016-17 to a new record low of 2.3 million hectares due to large carry-in stocks. Production is forecast to decrease 15% to 7.4 mln tonnes due to the lower area and a return to average yields. The lower production will cause total supply to decrease by 6% to 9.6 mln tonnes. Total domestic use is forecast to increase by 2% due to higher feed use. Exports are forecast to increase by 3% to 2 mln tonnes due to lower barley supplies at the global level. Barley carry-out stocks are forecast to decrease to 1.4 mln tonnes and decline below the previous five-year average. The price of feed barley is forecast to increase slightly due to the tighter total barley supplies and a higher US corn price.

This spring, on the Canadian Prairies, barley seeding was completed on time, despite wet conditions in some regions. Barley abandonment should be near normal levels as forage and pasture growth are generally good. Canada’s total barley area seeded has declined for three straight years and is 13% and 24% lower than the previous five and ten-year averages, respectively. Over the past few years Saskatchewan had been increasing its barley area and, although it is 6% lower for 2017-18, it is 2% higher than the previous three-year average. Saskatchewan now represents about 40% of Canada’s total barley area.

The USDA June 30 Acreage report adjusted US barley area lower from the March report. US area is estimated to be 24% lower than 2016 and dryness is hampering growth in Montana and North Dakota. The area seeded for both of these states was revised only marginally. However, area seeded to barley in Idaho decreased by 21% from the March Intentions. The US will have good barley supplies for at least the first part of the crop year but, with a much smaller crop, price expectations are good.

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