World: The latest market outlook on barley

According to the South West Terminal Marketing Group’s last week Market Outlook, The International Grains Council (IGC) is forecasting world barley demand to up 3 million metric tonnes next year to 147 million metric tonnes. The production forecast is increased by 1 million tons to 148 million tons, 8 million up from 2005.

The US Department of Agriculture (USDA) is reporting that US feed barley prices have risen 15 to 20 cents US per bushel during the last half of May due to increases in other commodity prices.

The US Economics Research Services is predicting that this year’s American barley crop will be 7 million bushels less than last year due to a lower harvested area (down 69,000 acres) and smaller yields (0.7 fewer bushels).

Some analysts are predicting that US corn prices will be improving next year and as a result Canadian feed barley prices will be firming up as well. The USDA’s May Supply and Demand report estimates that next year’s US corn production will down about 5 million metric tonnes from this year and with the increased demand for corn, next year’s corn carryout stocks will be chopped by about 37 million metric tonnes.

The IGC thinks that Russian barley exports will be lower next crop year than this year.

The IGC believes that the increasing demand for grain fed beef will increase the amount of barley use on Australian feedlots. Australia will however remain the biggest barley exporter, while Canada’s sales will be constrained by limited supplies.

Agriculture and Agri-Food Canada (AAFC) expects the benchmark Lethbridge feed barley price to increase $20 per metric tonne next year. They think that Canadian barley production will fall from 12.5 million metric tonnes this crop year to 11.3 million metric tonnes next crop year. AAFC’ crystal ball is telling them that the barley carryout will shrink from 3.5 million metric tonnes last crop year to 2.9 million tonnes this crop year and 1.9 million metric tonnes next crop year.

Statistics Canada’s planting intentions report showed the Canadian farmers were probably going to plant about 5% less barley next year than they did this year. The Stats Canada estimate of 10.4 million acres was about 100,000 acres lower than the lowest trade guess.

Statistics Canada’s March 31rst stock report showed that barley stocks were down about 3.5% from last year’s March 31rst levels.

Coceral is forecasting that total European 31 barley production will skyrocket to 58.5 million metric tonnes this year (which is up from this year’s 54.9 million metric tonnes). Coceral is predicting only a modest increase in planted area (14 million hectares versus 13.9 million hectares last year) but they see yields going up over 6% this year over last. Coceral sees European 31 spring barley production up almost 2 million metric tonnes this year over last despite a 100,000 hectare drop in seeded area.

UkrAgro Consulting reports that Saudi Arabia has bought enough feed barley to cover their needs until new crop supplies are available. The IGC says that the relatively good crop conditions in North Africa are “likely to limit feed import requirements”.

The IGC thinks that the Ukraine will export more feed barley next crop than they did this crop year.

The IGC predicts that world barley trade will shrink by 600,000 metric tonnes next crop year.

The IGC sees world barley production being about 1 million metric tonnes larger than world barley consumption next year.

The USDA is forecasting US barley consumption to fall by 15 million bushels next year.

AAFC believes that Canadian barley exports will fall by 400,000 metric tonnes next year. The stronger Canadian dollar is keeping a lid on Canadian dollar values despite rising world prices. Barley is sold in US dollars on the world market. This means that as the Canadian dollar gets stronger (and US dollar gets weaker), goods sold in US dollars are worth less in Canadian dollar terms. Lately, the Canadian dollar has been getting stronger against the US dollar.

The Canadian Wheat Board’s (CWB) Pool Return Outlook (PRO) for 2006-06 crop year for Pool A is $125 per metric tonne and $117 per metric tonne for Pool B basis a terminal export position. The CWB PRO for the 2006-07 Pool A feed barley pool is down to $113 per metric tonne at port position.

Chartists are saying that the technical resistance level on July barley is $127 while the support is put at $123.

Analysts are scratching their heads over the March 31rst barley stock number as it seemed to indicate that barley usage was lower in feed ingredients than the trade had expected.

Weather will be the dominant factor in the barley market until after harvest.

The USDA will be releasing their June Supply and Demand report on June 9th and their plantings report on June 30th.

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