USA: Freight cost to affect barley prices

In spite of higher prices for both feed and malting barley, the actual prices received by farmers remained flat since increased freight costs are absorbing most the of bump in prices, according to the report from Farm and Ranch.

“Some are seeing the malting barley inching up a little bit, while feed barley isn't doing really much,” said Randy Brag of Valley Grain in Casselton. “The bids to the elevators are inching up, but the cost to get cars, and the cost of freight has increased, so when you get back to the farmer, the farmer is taking it in the shorts again. The rise in price isn't going to the farmer because everyone's price has gone up.”

According to Brag’s statement, in regards to feed barley, the big issue is whether you can get cars. Valley Grain has some feed barley customers on the West Coast, and at this time they are running two weeks behind in getting barley delivered to them because of the rail car situation.

The upward tick in the prices of malting barley is mainly a regional situation, according to Brag. Each of the four maltsters that contract malting barley directly from the farmers has the bulk of their contracts in certain geographical areas. Some of those contracts are higher priced agreements than others, he noted, which translates into higher cash spot malting barley prices in those areas of better contracts versus vicinities where contract prices are lower.

Mr. Brag also echoes what others in the industry are predicting - the maltsters are going to have to come up with better prices in 2006 contracts to overcome the attractiveness of growing row crops such as soybeans, corn and dry edible beans. During the past two years, the maltsters have relied upon a huge stockpile of malting grade barley to keep contract prices low, but with the surplus being depleted, the contract price probably will have to come up.

On most elevator boards feed barley prices were unchanged, with one spot reporting a decline of a dime. Prices settled into a narrow range of less than 20 cents, with the top end listed at $1.42 and the low at $1.24. Malting prices were generally steady to a dime higher, with one elevator reporting a 19-cent decline. Prices were listed as high as $2.10 a bushel, with lows coming in at $1.75.

The maltsters would most probably start making public details of the 2006 contracts in late January or February of 2006.

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