This week's focus in global markets is largely centered on China's massive demand and buying spree for United States corn for 2020-21.
Today's USDA sales report included 2.108 million metric tons of corn sold to China for the 2020-21 crop year. This is the second-largest one-day sale seen in USDA data going back to April 1977, while two of the top 10 daily sales volumes were reported on Thursday and Friday of this week. A total of 5.85 mmt was purchased by China during the week.
Canada's barley market has and will also continue to face increased demand. The Canadian Grain Commission's week 25 export data shows 96,700 metric tons of barley exported through licensed facilities, while the cumulative volume of exports reported at 1.930 mmt, up sharply by 71% from the same week in 2019-20.
Statistics Canada reported 2.3454 mmt of barley (grain exports) shipped in 2019-20, which was the highest volume since 2.9418 mmt was exported in 2007-08, with the previous high prior to that at 3.439 mmt shipped in 1996-97.
In addition, Canadian exports of barley products was reported at 708,200 mt in 2019-20, taking total exports to 3.0537 mmt, very close to the 3.0575 mmt exported in the previous crop year and the highest volumes exported since 2007-08 when total exports (grain plus products) reached 3.911 mmt, while total exports were 4 mmt in 1996-97.
The challenge for the current crop year is the sudden change faced this crop year, with monthly Agriculture and Agri-Food Canada forecasts pointing to total exports (grain plus products) at 3 mmt in August, September, and October, 3.1 mmt in November, 3.4 mmt in December and 3.5 mmt in January. This forecast has increased by 16.7% in just three months and we are just shy of the mid-point of the crop year.
The most recent Exports of Canadian Grain and Wheat Flour shows grain exports of barley as of December at 1.5986 mmt, with 92.8% of this volume shipped to China.
In addition to reported exports, an additional 448,700 mt of barley is held in commercial storage as of week 25 (excluding process elevator stocks), a volume that is up 73.8% from the same week last year and 63.8% higher than the three-year average. Estimated farm stocks will be watched closely when Statistics Canada releases its Dec. 31 stocks estimates on Feb. 5.
Barley trade delivered Lethbridge has reacted by moving from roughly $200/mt at harvest to close to $300/mt this week. Saskatchewan Agriculture's weekly average prices show bids in that province constant during the month with a high of $227.40/mt, the highest reported since April 2013. We are very much in uncharted territory, given Saskatchewan Agriculture data going back to 1980.
While AAFC is currently forecasting ending stocks to rise slightly in 2020-21, the agency seems slow to react to the realities of demand this crop year across many commodities and this may change. The challenge will be to ration demand with replacing barley with corn and wheat.
AAFC is currently forecasting a 6.7% drop in barley acres in 2021 due to competition from competing crops, along with a modest drop in stocks. At the same time, it is conceivable that the market does its job to result in higher acres seeded this spring.
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