A Correction is Due for Southern Alberta Feed Prices
Feed corn prices often act as an upper-limit for barley in the southern Alberta feed market, although have moved below barley prices in mid-May after prices met in the mid-$230 range and has since kept going.
The attached chart shows Market Place Commodity's radio broadcast for June 29 that showed a $16/metric ton spread between barley, reported at $245/mt delivered Lethbridge and corn at $229/mt. The same broadcast for June 30 shows this spread narrowing to $7/mt, with barley down $5/mt to $240/mt and corn up $4/mt to 233/mt, the narrowest spread seen in weekly data since mid-May.
Feed barley has more than less-expensive corn weighing on prices. On June 29, Statistics Canada reported an estimated 7.5 million acres have been seeded in Canada. This is equal to the upper-end of the range of pre-report estimates, 13.7% higher than the five-year average and would be the largest acreage seeded in 11 years or since 2009 when acres were estimated at 8.6 million.
When this area is plugged into AAFC's supply and demand tables, using government assumptions which pegs yield at close to Canada's five-year average yield, crop year supplies would increase by 327,000 mt in 2020-21 to 11.6 million metric tons. This would be the largest year-over-year increase in supplies seen for any of the principal field crops based on the most recent estimates, while the largest available supplies seen since the 2009-10 crop year.
Another consideration is the condition of the nearby Alberta crop. As of June 23, the crop was rated at 81.1% good-to-excellent, the highest rating for this date in three years and 9.6 points above the five-year average for this week.
At the same time, stocks are forecast to grow in 2019-20 from 862,600 mt in 2018-19 to 1.7 mmt in 2019-20, a gain of 97% year-over-year, while to a volume 23.4% above the five-year average based on AAFC forecasts.
Corn imports remains an option as feeders seek to lower ration costs. In the June-through-August period of 2019, Statistics Canada reports Alberta's corn imports of 72,335 mmt, while this volume was 122,567 mt in the same three-month period of 2018.
At the same time, the $5/mt drop in the barley quote for June 30 is likely a sign of what is to come as barley prices slide in anticipation of new crop.
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Cliff Jamieson can be reached at email@example.com
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