Canada Markets

ICE Exchange cash prices reported for barley delivered to Lethbridge shows almost non-existent harvest pressure this fall, with feed barley falling from $197/metric ton to a low of $194/mt prior to mounting a rally higher with recent bids shown at $212/mt, the highest price indicated since May 2016. Over the past five years (2012-2016), price corrected an average of roughly $24/mt lower from the Aug. 1 price level to the low reached in either August or September.

A combination of the smallest crop seeded on record, along with the exceptionally high quality, which will cause producers to focus on the malt market, will lead to challenges for the feed industry. Canadian Grain Commission tables based on provincial crop insurance data shows 60.8% of Western Canada barley acres were seeded to malt varieties, with the highest percentage seen in Saskatchewan at 76.5%.

A quick look at CGC data shows prairie quality high as of Oct. 26, with mean protein for CDC Copeland, the two-row cultivar, making up the largest share of the prairie cultivars. It was reported at 10.2% in Manitoba, 11.2% in Saskatchewan and 11.8% in Alberta. Maltsters and exporters will have a heyday picking through these samples, while producers will lock bin doors while hoping for the best.

The U.S. Grains Council released a report on Oct. 26 that revealed the hope that U.S. corn and DDG will help fill the feed deficit in the southern Alberta feed sector. A recent trade mission into Alberta along with ongoing work by an Alberta feed consulting company that works for the USGC continues to seek ways to increase the share of both commodities in Canadian feed rations. The report notes that the first unit-train for the crop year was moved into the Lethbridge area the week prior to the trade mission.

Time will tell whether this will become a trend. While corn prices have drifted sideways for a number of weeks, the Canadian dollar has fallen against the USD in six of the past seven weeks and has faced further weakness this week, making corn imports increasingly costly. As well, supplies of feed wheat and the possibility that the barley crop is larger than indicated in earlier estimates could help ease concerns. Last week's Saskatchewan Agriculture yield estimates pointed to a potential upward revision in production of approximately 276,000, which could also take place in the other two provinces when Statistics Canada releases its final estimates in December.

This week, Alberta Agriculture may provide a glimpse of acres in the north that could be carried over for spring harvest, which may lead to increased feed supplies in the spring. Lastly, it may be a matter of waiting out the producer who may or may not find an opportunity to supply the malt market.

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

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