(Commodity News Service Canada) — The recent surge in commodity prices has not had a direct correlation to barley prices — yet.
Jim Beusekom, with Marketplace Commodities in Lethbridge, said current demand for barley is not very strong right now.
“End users are pulling back a bit, as they are covered quite nicely for product in January and February,” Beusekom said. “There is simply too much grain around for cash prices to be very high.”
With cold temperatures blanketing nearly all parts of Western Canada, it would be fair to assume that demand from cattle producers for feed would have gone up, which in turn would send barley values higher.
“It’s increased a bit, but has been offset by an increase in sellers,” Beusekom said. “It’s unlike the other grain and oilseed markets. End users are extending their coverage into February and March at these price levels, so they are taking advantage of it, by deferring some of the deliveries.”
In 2010, there were 6.36 million acres of barley planted in Western Canada, according to Statistics Canada. Despite the relatively low prices, Beusekom said he doesn’t see acreage declining this year, because it was already quite low last year.
However, Beusekom said, in a couple of months, barley may see a sharp increase in price.
“Come springtime, I think the price on barley could go up significantly,” he said. “Once the demand starts to come from the end users, towards the middle or end of March, I think the market will rally quickly. We need to narrow the gap between barley and some of the other commodities.”
“In 2007, when prices hit around $240 per ton, there was less fundamental reason to do so than this year. So as to how high it goes this year, it depends on what types of buyers and sellers we have at that time.”
Current elevator deliveries for feed barley were bringing as much as $3.45 per bushel in Manitoba, $3.24 per bushel in Saskatchewan and $4.25 per bushel in Alberta, according to Prairie Ag Hotwire.