Feed barley delivered into the Lethbridge market was reported at $248/metric ton on Friday, as per the Market Place Commodities radio report as accessed on Twitter. At the same time, there are indications of significant new-crop volumes traded for Sept/Oct/Nov at $220/metric ton.
The seasonal move higher in the spring and early summer period should be nearing an end. As seen in price data for the past three years on the attached chart, the seasonal high reached for the past three years (2016-19) ranged between May 28 in 2018 to July 10 in 2017. Over the past three years, price corrected an average of $16/mt or 6.1% from the seasonal high to the last weekly price reported in July.
Prices should correct as producers finish seeding and spraying, road bans are removed and as the crop continues to show promise. As of June 16, Alberta Agriculture rated the province's barley crop at 82.9% good to excellent and Saskatchewan Agriculture rated the province's crop at 78% good to excellent.
Another consideration is the estimate of stocks on the Prairies. On May 7, Statistics Canada estimated the March 31 barley stocks at 3.529 million metric tons, which is up 31.8% over the same date in 2019 and close to equal to the five-year average for this date. At the same time, the report was accompanied by warnings that the COVID-19 pandemic hampered the farm stocks survey, which ended prematurely during March and may have a bearing on the accuracy of the farm stock estimates.
Based on the current March 31 estimate and the five-year historical average disappearance in the April-through-July period, ending stocks would arrive at 1.354 mmt as of July 31, up 57% from the 2018-19 ending stocks. This compares to the current AAFC estimate of ending stocks at 1.7 mmt, up 97% from 2018-19.
Historical disappearance may be of little use when one considers the cattle backed up in lots as the packing plants slowed due to COVID-19 outbreaks in the major slaughter plants, adding to feed demand. At the same time, the June 19 report shows corn trading at $233/mt, which could be replacing barley in the ration, made more affordable with the Canadian dollar strengthening in four of the past five weeks. Feed wheat is also shown at $235/mt.
Cliff Jamieson can be reached at email@example.com
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