Canada: CWB malting barley prices down CA$8/t

Designated barley values are down CA$8 per tonne for both two-row and six-row varieties, compared to last month’s published values, according to CWB’s released an updated designated (malting) barley Pool Return Outlook (PRO) for the 2006-07 crop year, April 19. The drop in the PRO is attributed to the uncertainty created by the federal government’s March 28 announcement that it will remove the single desk on barley effective August 1, 2007, as well as other market factors.

The CWB also announced that it has suspended the 2007-08 PROs and Producer Payment Options (PPOs) for both designated and feed barley as the uncertainty of the current situation makes it impossible to estimate a pool return.

World malting barley prices have been pushed to this year’s high levels primarily by production problems in two of the three major global malting barley exporters, namely Australia and the European Union. New crop supplies will not be available from these regions for some time, which is expected to support global prices until early summer.

In this environment, the federal government’s stated intention to remove the single desk on barley August 1, 2007 is negatively affecting 2006-07 projected returns. As a result of significant market uncertainty caused by this potential policy change, the CWB has reduced the projected size of the 2006-07 designated barley pool. Many customers are now in a wait-and-see-mode, holding off on purchases in the hopes that malting barley values will decline as new crop supplies become available. Customers are also reluctant to make purchases as they are anticipating their ability to access supplies from multiple sellers at values lower than a single-desk seller. This means previously projected sales at current high price levels will not materialize for the 2006-07 pool. In addition, higher spot prices in August are expected to erode farmer deliveries previously expected in the 2006-07 pool.

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