Glacier FarmMedia COVID-19 & the Farm

Lethbridge barley still in narrow trading range

Lethbridge barley prices have remained in a narrow trading range for most of November, and it’s expected the current range of $180-$185 per tonne will likely continue in the near term.

“We’ve been seeing Lethbridge barley remain relatively steady,” said Jim Beusekom, grain broker at MarketPlace Commodities at Lethbridge, noting prices declined heavily earlier in the fall due to extremely good production across the Prairies.

“Periodic spurts of demand from the end user will push it up to the $185 range, while a lot of selling from the producer brings it back down to the $180 level, so it’s a fairly balanced market.”

Domestic demand remains fairly solid in the Lethbridge area, he said, due to barley’s favourable price.

“Domestic demand is really good for feed barley, mainly because it is the cheapest commodity they can buy today,” he said. “Secondly, cattle on feed numbers are quite decent as well. I’m not trying to suggest they’re really high, but there is good demand from the feedlot.”

According to Agriculture and Agri-Food Canada’s November crop report, domestic barley usage is expected to run to 6.461 million tonnes during 2013-14, up from 6.262 million the previous year.

Despite the stable market, Beusekom believes there’s still a chance for prices to move even lower as feed wheat starts to compete with barley.

“I think they could (go weaker),” he said. “We’re seeing feed wheat start to compete against barley. Some of the other lower-grade feed wheat and soft wheat is starting to be offered in larger volumes now at about the same price per tonne as barley. We could see that being a bigger factor going into the first quarter of 2014.”

According to the Alberta Canola Producers Commission, Lethbridge feed wheat was valued at $196 per tonne during the week beginning Nov. 18.

However, U.S. corn doesn’t appear to be a feed alternative to barley in Lethbridge right now, Beusekom said, noting the prices are still too high to make it a legitimate competitor.

“Where U.S. corn is today, it’s still more money than what our feed barley is, so corn is still not going to replace or compete with barley in Lethbridge,” he said. “Barley still remains the cheapest commodity here in Alberta.”

At the close on Wednesday (Nov. 27), the March corn contract on the Chicago Board of Trade was valued at US$4.265 per bushel.

Looking ahead, Beusekom said because prices have not rallied with producers sitting on their barley, he expects prices to downtrend early in the New Year when they begin selling their product again.

“I think another thing we have to look at is that markets aren’t rallying when farmers are sitting on their grain,” he said. “A lot of them are carrying it into a new fiscal year for them, so I would expect that selling picks up in January, February and March, leading to a decline in prices.”

— Brandon Logan writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.

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