The USDA's barley analysis doesn't make many headlines on report day but the tight global supply according to recent estimates bears watching.
Since first reporting 2021-22 statistics in May, the USDA has revised its global barley production estimate lower each month, starting at 157.31 million metric tons in May to the recent 147.99 mmt seen in this week's October report. This is the smallest global production estimated in three years, after reaching production of 160.545 mmt in 2020-21, the highest production estimated since 1994-95.
This month's estimates included downward revisions in production for some of the largest producers, with European Union production revised 300,000 metric tons lower, Russian production revised 700,000 mt lower and Canadian production revised 700,000 mt lower.
The USDA's latest estimates show global demand exceeding production by 3.652 mmt, the first time in three years that global production is estimated below global demand, while the largest deficit seen since 2010-11, or 11 years. The USDA's consumption estimate has exceeded production in six of the past 10 years.
As seen on the attached chart, global stocks of barley are estimated at 16.959 mmt, down for a second straight year and the fifth time in six years. This is the lowest stocks estimated since 1983-84. In USDA data going back to 1960-61, we have only seen stocks slip below this level in eight crop years. The lowest stocks reported are shown at 12.147 mmt in 1960-61, while are estimated as high as 36.898 mmt as recent as 2009-10.
Agriculture and Agri-Food Canada is currently forecasting Canadian stocks to fall to a record low of 300,000 mt, while the USDA data shows 211,000 mt. The test will be how low stocks can fall, while upward pressure will remain on prices. AAFC reports the average price of barley delivered into southern Alberta reaching a record $294/mt in 2020-21 and have pegged the 2021-22 average at $350/mt, although weekly Alberta Agriculture data shows little trade below $400/mt and reaching as high as $425/mt since the Aug. 1, or the start of the crop year.
This month, the USDA estimated Canada's exports of barley at 1.6 mmt (excluding products), down 400,000 mt from the September estimate, while likely close to AAFC's current 2 mmt estimate (including products).
Week 10 CGC statistics shows weekly exports of barley at 134,400 mt, the second-largest weekly volume shipped this crop year, while cumulative exports are reported at 539,700 mt, up 4.9% from the same period last crop year. Future reports will likely show that little time is wasted getting barley sourced and on a vessel for China.
This week's USDA data included a lower revision in its forecast for Canada's wheat production due to an estimate of 10.5% unharvested or abandoned acres, which compares to the current AAFC estimate of 3.4%. While AAFC's September estimate indicates a higher abandonment rate in 2021 than the previous year for barley, its most recent estimates point to a 9.8% abandonment rate, which is only slightly higher than the 8.2% calculated for 2020, while is below both the five-year average of 10.3% and the 10-year average of 10.1%. This bears watching.
Cliff Jamieson can be reached at email@example.com
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