E-Malt.com News article: USA: Both feed and malting barley markets remain stable
Barley prices have moved very little either way over the past two weeks as continued strong corn prices have given support to the feed barley and contracts being offered by the maltsters have lent strength to malting barley prices, according to Farm & Ranch Guide, February 16.
Those in the barley industry are pinning their hopes on these strong markets, that they will stimulate renewed interest in barley production and turn the tide of declining acreage.
"I think we are going to hold our own, compared to last year, as far as acres and production are concerned,” said Louis Arnold, chairman of the N.D. Barley Council who grows barley near Esmond, N.D. “But I think we are going to see an increase in barley production down the road. And the reason that I say that is if this situation with corn and ethanol production continues, we're going to need some feed other than corn and barley makes a nice substitute."
Even though Arnold expects the barley acres to remain constant this year, he anticipates there will be a shift in barley acreage northward in the region, since the more southern areas stand a better chance of getting a corn crop than the northern regions.
This will likely translate into a decline in barley acreage in the south and expansion of acres in the north, especially, according to Arnold, if the prices for feed barley can be stabilized in the $3 per bushel area.
Factors outside domestic ethanol production have also served to bolster the feed barley markets - especially the Australian drought and the resulting sales of feed barley to Japan.
According to Steve Edwardson, executive director of the N.D. Barley Council, the U.S. has supplied over 250,000 metric tons of feed barley to Japan in the last half of 2006, with additional sales pending. Edwardson is hopeful this foot in the door to the Japan market will help secure a portion of the market for the future and Arnold is also holding on to that expectation as well.
“I think we will see more barley exported to Japan on a gradual basis,” Arnold noted. “They are a patient people in Japan. If they try something and they like it they will come back and get a little more. So I think we've got an in this year and it will probably help down the road.”
On the malting side of things, Arnold said most of the malting barley contracts were being offered in the range of $3.40 to $3.60 a bushel, and there is a question as to whether all of the contracts have been filled. “I have heard rumors that they have acres left to contract,” he said.
Finally, Arnold pointed to crop budgets, recently released by the NDSU Extension Service for various crops in nine regions of the state, noting that barley had a fairly high return in many of those regions when compared to other crops.
“When you start pushing 125 to 130 bushel per acre corn, you have a lot of money out there to do that,” Arnold said. “We have raised corn for a few years now, and I figure we will have $200 an acre invested in the crop and haven't got it harvested. If any amount of drying is needed you will have another 25 bucks in it.”
According to Edwardson, the recent increase in exports of carryover stocks, coupled with lower production over the last few years, have resulted in significant price increases in the barley market. Feed barley prices are currently ranging from $2.80 to $3.00 per bushel, compared with pre-harvest values in the area of $1.35 to $1.50 per bushel. Malting barley prices have also experienced solid gains, with spot cash prices ranging from $3.25 to $3.50 per bushel.
"In general, the low production we have seen is likely to stimulate price increases in the coming months," Edwardson said.
A check of local elevator board prices for feed and malting barley on the website smallgrains.org has shown very little movement for either class in the past two weeks. Feed barley was mostly steady to a nickel higher with a couple elevators reporting a 5-cent decline. Prices ranged from $2.40 to $2.95 a bushel.
On the malting barley side of the board, prices at many locations were unchanged, but a few elevators reported increases of 5 to 10 cents a bushel, but, on the other hand, a small number also noted a price decline of a nickel. Malting barley prices ranged from $3.10 to $3.55 a bushel. The price spread between malting and feed barley prices was generally in the 30 to 50 area; however one location reported a dollar difference between the two classes.
21 February, 2007