Canada: Barley use expected to increase both in 2016/17 and 2017/18

For 2016-17, Canada’s domestic barley use is forecast to increase by 5% to 6.401 mln tonnes due to higher feed use in cattle and hog production. Exports are forecast to decrease by 6% to 1.9 mln tonnes due to lower world feed barley demand. However, trade in malting barley remains largely unchanged. Barley carry-out stocks are forecast to increase by 39% to 2.0 mln tonnes, well above the previous 10-year average, Agriculture and Agri-Food Canada said in its February report.

The price of feed barley is forecast to decrease from 2015-16 due to the higher supplies, softer US corn prices and domestic competition with other feed grain substitutes. The Statistics Canada stocks report showed that barley stocks are about 12% higher than 2015. Commercial stocks decreased by 9% from last year at this time. For the main barley-producing region, the Prairie Provinces, farm stocks are up 14% from last year and are 15% higher than the previous five-year average.

Throughout January, the Lethbridge cash price of feed barley decreased due to long term seasonality, soft demand and competition from other feed grain alternatives. Prices are expected to stay flat through February before mounting a rally in March. World FOB feed barley prices, quoted in US dollars, strengthened with the run-up in futures prices for US corn and a softer US dollar. Argentina had overtaken Australia as the lowest cost source for feed barley as better than expected yields increased their 2016-17 barley production. In 2017 to-date, the world malt barley price has decreased due to strong Australian supplies and the premium to feed barley has deteriorated to its lowest level so far this crop year.

For 2017-18, barley-seeded area is forecast to decrease 3% to 2.5 mln ha from 2016-17 due to high barley carry-in stocks.

Production is forecast to decrease 9% to 8.0 mln tonnes due to the lower area and lower yields.

Despite the lower production, the large carry-in stocks will allow total supply to decrease by only 2% to 10.1 mln tonnes. Total domestic use is for cast to increase by 3% due to slightly higher feed use in cattle and hog production.

Exports are forecast to increase by 4% to 1.975 mln tonnes due to steady world supplies and trend trade patterns.

Due to slightly higher total use and exports, barley carry-out stocks are forecast to decrease by 25% to 1.5 mln tonnes.

The Lethbridge cash feed barley price is forecast to increase slightly from 2016-17 due to the general recovery in coarse grain prices led by US corn prices. For the second straight year, malt barley contracting in the US barley states has declined. In the US, two years of large malt quality barley production has increased inventories and the large US brewers continue to reduce barley area under contract. Some of the northern US states report that 2017 malt barley contracting is down by 20 to 60% from 2016.

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