Canada Markets

Agriculture and Agri-Food Canada has estimated Canada's barley production at 7.450 million metric tons, an estimate that is 30.6% lower than the 10.741 mmt produced in 2020-21, while would be the smallest annual production realized since 2014-15. The 30.6% drop in year-over-year production compares to the 30.8% drop seen in 2014-15, as seen in Statistics Canada estimates.

The combination of the lower production estimate for 2021 along with the current estimate that points to record low stocks as of July 31, 2021 of 500,000 metric tons has led to a record low level of supplies available for 2021-22, reported at 8.010 mmt. This is down 33.2% from the 11.997 mmt estimated for 2020-21, while also the largest year-over-year drop realized.

The race for coverage will be intense between maltsters, feeders and exporters, with exports forecast to fall by 52.3% to 2.050 mmt while feed use is forecast to fall by 23.9% to 5.051 mmt, forcing increased focus on alternative grains, including imported corn. After shipping 3.5 mmt of barley to China in 2020-21, there is no indication that their demand has fallen; in recent months directives from China's government has named barley along with a number of other grains as a means of reducing the country's reliance on imported corn.

AAFC's estimate will be followed by a number of other estimates that bears watching. On Aug. 30, Statistics Canada will release its first official estimate based on July producer surveys. On Sept. 14, Statistics Canada will release its model-based estimate based on August crop conditions, while the final estimate will be released on Dec. 3. In addition, Statistics Canada will release its official estimate for July 31 stocks on Sept. 8.

During the past five years, the barley crop production forecast was revised higher from the August report to the September report in three of the five years, while the average five-year increase is 0.3%, or the September production estimate averages 0.3% higher than the August estimate.

At the same time, the final production estimate, released in December following the November producer surveys, was higher than the August estimate in all five of the last five years (2016-20), while averaging 4.9% higher.

This year could be different. During the past few weeks DTN has discussed the notion of crops salvaged for feed. This is an issue on both sides of the Canada/U.S. border and governments will be scrambling to reassess their harvested acre estimate. This month's AAFC estimate saw a very slight decrease in the percentage of barley acres harvested, falling from 90.5% in July to 89.4% in August. This compares to an estimated 91.8% in 2020-21 and 91% in 2019-20. At the same time, AAFC notes "the abandonment rate is expected to be higher than in normal years," while Statistics Canada has indicated that this will not be addressed until the December report.

Cliff Jamieson can be reached at cliff.jamieson@dtn.com

Follow him on Twitter @Cliff Jamieson

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