USA: Barley prices still pressured by carryover stocks and high-energy costs

The malting barley industry is still pressured by the carryover supplies that have accumulated over the past few years; by the high-energy costs, especially natural gas; and as well because of the light beer craze, Farm & Ranch Guide posted on August 03. Marv Zutz, executive director of the Minnesota Barley Growers Association, predicts the situation isn't going to change anytime soon.

"What's happening is the industry is still grinding through the 2003 crop and has not really started to get into the 2004 crop, let alone have to worry about the 2005 crop," Zutz said. "There is plenty of stocks on hand and also it appears there will be stocks of malting barley in Canada as well, which will place extra pressure on the malting barley prices."

"The malt industry is being pressured by the high energy costs, especially natural gas," he noted. "Also, because of the light beer craze, the calorie craze, it only takes 75 % of the barley to produce the same amount of beer as we did 10 years ago. So we are putting out the same amount of beer, but we aren't using the same amount of barley to make that beer. And that's primarily because of new efficiencies in the brewing process and also because of the light beer and low calorie products."

Any movement in the feed barley market will come from the corn market, according to Zutz. "Corn is the leader," he said, "with 10 billion bushels of production you're out front."

The barley harvest has started in northwestern Minnesota, and so far the yields have looked to be average or above average, but the verdict is still out on the crop quality. "We're crossing our fingers. The guys started knocking down the crop this past week, but the rain showers the last few days have slowed down the harvest," he said. "We've had reports of average or above average yields up in the areas of Alverado and Warren, but a lot of the barley crop in Roseau and Kittson counties were drowned out with a lot of prevented plantings. But the stuff that is remaining looks promising.

"We haven't heard any DON reports yet, but there is a prevalence of scab out in the wheat fields right now-really hurting the wheat yields in some fields from 20 to 40 percent," he continued. "But we are hopeful that the barley crop hasn't suffered from disease that much."

It doesn't offer help for the near term barley markets, but USDA's Agricultural Research Service (ARS) has started a program that will study different types of barley and processing methods for producing ethanol from this grain group. Even though barley grows well in the eastern and western states, the starch content of most barley varieties, 50 to 55 percent, results in lower ethanol yield when compared to corn with a 72 percent starch level.

The ARS Eastern Regional Research Center in Wyndmoor, Penn., is hoping to create new barley varieties with higher starch content to solve this problem. They are looking at malt, hulled and hulless barley suitable for growers in various parts of the country. At the present time several Virginia hulless lines look promising. If their efforts prove successful, barley growers may have a new market for their crop within a few years, which could possibly help support long-term price outlooks.

In checking local elevator prices on http://smallgrains.org, both feed and malting barley prices remain mostly unchanged. Feed barley prices rose from two cents to a dime in a few locations, with the prices ranging from a low of $1.23 per bushel to posted high of $1.46. Malting barley prices increased a nickel in a handful of elevators, with the low quote at $1.68 and a high of $2.05.

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