Canada: Barley use expected to increase by 7% this season

For 2017-18, Canada’s total domestic barley use is forecast to increase by 7% to 6.298 mln tonnes with higher feed and industrial use, Agriculture and Agri-Food Canada said in its May report.

Total barley exports are forecast to increase by 19% to 2.775 mln tonnes due to lower world barley supplies.

Canada’s barley carry-out stocks in the current season are forecast to decrease by 51% to 1.1 million tonnes and remain below the previous three and five-year averages.

The Lethbridge in-store feed barley price is forecast to increase due to the tight total barley supplies and the decline in the supply of other domestic feed grain substitutes.

The Statistics Canada March 31 Stock Report confirmed lower stocks of Canadian barley with a decrease of 26%, the bulk of the decrease was on the Prairie Provinces where farm stocks were down 29% from 2017. Overall, total Canadian barley stocks are estimated to be lower than the previous three and five-year averages. In western Canada, farm stocks decreased in all three provinces. The higher feeding rate was due to the smaller forage crops across the Prairie Provinces and the cold winter. In the first half of May, the Lethbridge barley price had traded into the low C$260’s/tonne (t) as road bans continued and the Prairies experienced cool, wet April weather which slowed pasture growth and did not allow for much seeding progress. World feed barley market prices continue to slowly edge higher and posted a crop year high in mid-April whereas the world malt prices have softened from the January highs which were in the US$270/t range. Currently the malt spread remains below the previous five-year average and is down to about US$30/t which is less than half of the level in January.

For 2018-19, Canada’s barley-seeded area is forecast to increase 5% from 2017-18, to 2.42 mln ha - a slight rebound from record low seeded area.

Production is forecast to increase to 8.0 mln tonnes due to the higher area.

Despite higher production, lower carry-in stocks will cause total supply to decrease by 10% to 9.2 mln tonnes. Total domestic use is forecast to decrease by 4% to 6.05 mln tonnes due to lower feed use but only a slight increase in industrial use.

Exports are forecast to decrease by 17% to 2.3 mln tonnes due to lower total supplies, higher world supplies and a return to normal trade patterns.

Barley carry-out stocks are forecast to decrease by 24% to 0.8 mln tonnes and remain close to the previous five-year average.

The Lethbridge cash feed barley price is forecast to increase from 2017-18.

The increase of 5% in Canadian barley area was due to lower year-to-year carry-in stocks, feed grain supplies and area competition from more profitable crops such as canola and wheat. The 2018 Canadian barley area is 5% and 6% below the previous three and five-year averages, respectively and is 15% lower than the previous 10-year average. Total barley seeded area and production have declined by about 53% and 50%, respectively, when compared to the 1996-97 crop year. For 2018, the area seeded to barley in the Prairie Provinces is expected to increase by 5% and this will represent 94% of Canada’s total barley area. Barley for feed use peaked in the late 1990’s, at slightly over 10 mln tonnes per crop year, but has declined by about 45% from those levels. The decline in area seeded and production is closely related to lower total livestock numbers. From a peak of nearly 15 million head in 2005, Canadian total cattle numbers have decreased by about 22% or 3.3 million head. Total hog numbers had its peak in 2004 but have fared much better declining by only 6% or 1.4 million head. Over the past few years, barley feed demand has been consistent as the cattle numbers have stabilized and there has been slow but steady growth in hog numbers for the same period. Malting barley continues to enjoy solid demand and remains competitive with many of the other cropping alternatives on the Canadian Prairies. Small by comparison, Eastern Canada is estimating only a slight increase in the area seeded to barley. In Quebec, the area is increasing as area seeded to mixed grain declines.

The USDA released its barley price projection for 2018-19 with a farm gate price of US$4.60/bushel (bu), this is an increase of US$0.10/bu or 2% from 2017-18. The price increase is in line given the USDA’s projections for lower 2018 US barley production and total supplies. However, feed use of barley is forecast to be flat and the vast majority of stocks are of malt quality. The US barley farm gate price is a malt quality based calculation so indications are for US malt prices will only increase marginally from last crop year. For 2018-19, world barley supplies are expected to increase slightly with little change in ending stocks or total trade.

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