Canada Markets

Feed Barley Price Prospects Limited This Spring

Cliff Jamieson
By  Cliff Jamieson , Canadian Grains Analyst
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Feed barley delivered Lethbridge Alberta dipped to harvest lows of roughly $155 per metric ton in March, and have since moved higher, although potential upside remains limited. (DTN graphic by Nick Scalise)

Feed barley prices dipped to $155 per metric ton delivered Lethbridge area earlier this month, with reports of a modest increase into the $160 range since, but it may be unwise to expect the typical spring rally in feed prices.

Over the past five crop years (2011/12 through 2015/16), feed barley prices have rallied an average of $31/mt, or 15.2%, from the early March low to the high reached as early as May 2 and as late as July 9, according to data reported by the Alberta Canola Producers Commission. The smallest increase was seen last crop year, when price increased $11/mt, or 5.3%, over this period.

The recently released Canfax Alberta and Saskatchewan Cattle-On-Feed Report, March 1, 2017, shows the numbers in feedlots (1000+ head) estimated at 871,956 head as of March 1, down 6% from last year, while 5.7% below the five-year average.

In addition to the lower numbers, increased feed supplies are also weighing on the market. Crop insurance claims point to 960,000 acres of unharvested grains in Alberta along with approximately 1.3 million acres in Saskatchewan, with a great deal of the cereals likely to be looking for a home in the feed market following the expected spring harvest.

Current AAFC estimates include a year-over-year increase in durum expected to disappear in feed markets (Feed, Waste and Dockage category) at 875,000 mt, an increase of 437,000 mt of wheat along with an increased disappearance of 277,000 mt of barley, a combined increase of 1.6 million metric tons over 2016/17. At the same time, all three grains are expected to add substantially to ending stocks in 2016/17, with exports behind the expected pace, which could push a higher-than-expected volume into feed channels and weigh further on price.

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

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(ES)

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