Canada Markets

Statistics Canada's estimate for Dec. 31 barley stocks came in at 5.382 million metric tonnes, above the Dow Jones pre-report estimated range of 4.106 mmt to 4.785 mmt. Stocks are 20.3% lower than the previous December based on a combination of lower acres and yield.

What is puzzling is the implied feed demand which arises from this data. Given current AAFC supply and demand data, total disappearance of barley through the first five months of the crop year ending Dec. 31 is 3.679 mmt, which is 800,000 metric tonnes lower than the same period in 2013 while also 443,000 below the average of the last three years.

Barley exports are not the limiting factor, as the CGC's Exports of Canadian Grains and Wheat Flour suggest August through Dec. 31 exports at 647,300 mt through licensed channels, 103,000 mt or 18.9% above the previous year. Most recent week 26 data shows exports at 755,300 mt as of Feb. 1, which is even a larger increase over year-ago data, although some discrepancies arise in the CGC's year-to-date numbers last crop year.

With southern Alberta feeders largely covered through the end of March and recent prices dipping to the December low of $195/mt as seen on the attached chart, the market may struggle to find support until such time that larger volumes are needed to meet the more difficult April/May period. Brokers do indicate that supplies are slowly increasing as producers' hopes for malt selection are dashed and supplies are channeled into feed markets.

The balance of the crop year could prove interesting for feed barley markets given current projections. Debate will continue over whether feed demand for barley is in fact backing off to the extent suggested or whether there is far more supplies available than expected due to understated 2013 carryover or 2014 production estimates.

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

Follow Cliff Jamieson on Twitter @CliffJamieson

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