Canada: AAFC provides forecast for barley in Grains and oilseeds outlook

Canada: AAFC provides forecast for barley in Grains and oilseeds outlook

The Agriculture and Agri-Food Canada (AAFC) forecasted the 2006-07 barley production to decrease by 10% due to lower area and yields. According to “Canada: Grains and oilseeds outlook” released May 30, supply is expected to decline by 11% because of lower carry-in stocks. Exports are forecast to decrease by 15%, as lower feed barley exports are only partially offset by higher exports of malting barley.

Despite lower exports and domestic feed use, carry-out stocks are expected to fall significantly as a result of lower supply. The average off- Board feed barley price (No.1 CW, in-store Lethbridge) is forecast to increase by $CA20/t from 2005 06 to $CA130/t. The CWB PRO for No. 1 CW feed barley for Pool A in 2006-07 is $CA113/t, vs. $CA117/t for Pool B in 2005-06. The CWB PRO for SS2R malting barley is $CA161/t, down by $CA9/t from 2005- 06, pressured mainly by strong export competition from Australia.

Total production of grains and oilseeds in Canada is forecast by Agriculture and Agri-Food Canada (AAFC) to decline by 6% from 2005-06, to 63 million t, versus the 10-year average of about 60 million t. Production is forecast to decline by 6%, to 47.9 million t, in western Canada and by 5%, to 15.2 million t, in eastern Canada. Total exports and total domestic use are expected to increase significantly and be 18% and 11% above the 10-year average, respectively. In general, wheat prices are expected to increase from 2005-06, while durum prices are expected to decrease. Prices for canola, feed barley and corn are expected to strengthen, but prices for soybeans and oats are forecast to decline.

Statistics Canada’s (STC) survey of seeding intentions for 2006 indicated a significant increase, from 2005, in summerfallow, reflecting farmer uncertainty about seeding decisions at the time the survey was taken at the end of March. It is assumed that precipitation will be normal for the growing and harvest periods, and that the abandonment rate and quality will be normal. Trend yields are assumed for both western and eastern Canada, as soil moisture reserves are good in most areas, although there are dry areas in northern Alberta and areas of excessive moisture in Manitoba and Saskatchewan.

Prices will continue to be pressured by the strong Canadian dollar. The market outlook is very tentative due to the high degree of uncertainty regarding global supply and demand conditions. The major factors to watch are: weather and growing conditions in the major producing countries, import demand from China and India, EU export subsidies, increased demand for biofuel, ocean freight rates and the Canada/US exchange rate.

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