USA: Malting barley continues to show some strength

Malting barley prices have shown a little upward movement lately as the malting industry tries to clear out some of the lower VOM barley in the two to three range out of the pipeline, Farm & Ranch Guide posted on January 19.

Kelly Kotowicz from the Alvarado Farmers Elevator in Alvarado, Minn., said prices for malting barley have advanced 25 to 30 cents nearby with a spike of a dime or so in the last week on our one to three VOM barley.

“We are also coming out with malting barley contracts next week and we are looking at prices in the $2.70 range for Lacey, Stellar, Robust and Tradition,” he said. “I think Robust will be out of the pipeline by 2007, although it looks like we will do another million bushels here this year, but I think that will be the end. More than likely Stellar and Tradition will be taking its place.”

The Alvarado elevator handles contracts for International Malting Company. Based on grower interest in contracts this year, Kotowicz predicts barley acres could increase by as much as 25 percent in his area due to many factors.

“Higher contract prices have a lot to do with it,” he noted, “but we have gotten a little easier on our specs too. The protein standard has been moved up to 13.5 percent and we're discounting 15 cents from one to two VOM instead of a quarter like we were in the past.

“In addition malting barley insurance is based off from $1.85 this year instead of $2.35 last year, so barley is a little more enticing as far as insurance purposes,” he continued. “There's always been an LDP on barley during the last three years of 30 to 40 cents, plus barley doesn't require a lot of nitrogen. These are all reasons why I think we will see a drastic increase in barley acres in 2006. We saw drastic decreases in acreage last year and I think we will see drastic increases this year.”

The latest news from the Food and Drug Administration allowing barley to be designated a health food isn't going to show up in the market for a while, Kotowicz predicted.

“Right now we are at two to three percent of the barley crop going into food products and eventually we could raise that figure to 10 to 15 percent, but that's a little ways down the line,” he said.

News relating to feed barley isn't quite so bullish, with Kotowicz categorizing the market as “just coasting along.”

“We're coming off a huge corn crop so the price of corn is going to be in the tank for awhile yet and I think feed barley prices are going to stay with it,” he said. “It's going to be stagnant for quite awhile-I don't expect this feed barley market to come up for a long time.”

The December Grain Stocks Report from the USDA showed total barley stocks of 208 million bushels on Dec. 1, 2005, compared to 246 million bushels a year earlier. The USDA also left the expected average price for this marketing year unchanged at $2.35 to $2.55 a bushel.

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