E-Malt.com News article: USA: The malting barley crop is down this year and leads to low feed barley prices

The supply of good malting barley is definitely diminished this year, but carryover stocks will fill in the slack, at least for a few months, and the bushels that won't make malting grade this year because of the high VOM levels will shift that production to the feed barley market and serve to hold those prices down, Farm & Ranch Guide posted on September 28.

The malting barley crop is down in north-western Minnesota this year, according to Kelly Kotowicz at the Alvarado Farmers Elevator in Alvarado, Minn. "We lost probably a third of our crop to high VOM levels, which was rejected for feed barley, and our yields were cut down to about 50 to 60 bushels per acre," he said. "Our VOM levels in this area are running from two to four percent. Normally we discount up to two percent VOM on our contract, but this year we went to thee VOM."

According to Kotowicz, a slightly higher VOM barley can be taken into the malt house, but it takes one or two additional steeping processes to lower the VOM content enough for malting. Since this requires extra steps, the higher VOM barley is bought at a discount.

"The guys are getting around $1.85 for three VOM barley and feed barley is $1.35 here, so they are 50 cents higher than feed price," he said. "But there is a limit to the two or three VOM that we are buying here - I've got a limit to buy and that's it."

Kotowicz feels the maltsters are pretty much getting through the past year's malting barley they had under contract and might be looking for some low VOM from last year that wasn't under contract.

"I'm telling my guys that have malting barley from 2004 under one VOM to hold unto it for now," he said. "Some of the maltsters are going to get pretty aggressive, I think, in the later part of the season to get some of the last of the 'neg' (barley with 0.25 percent VOM or less) bought up.

"They want neg and they are going way out west to get it, but with higher fuel prices they are going to try to get some closer, which might mean a price bump for good quality malting barley down the road in a few months," he continued. "If they get into the first part of the summer and they are out of barley and they're scratching their heads on where they can get it, we might see a rally in the spot malting barley market."

The malting contracts issued for the 2006 growing season may also have a higher price connected with them, according to Kotowicz.

"With the potential return on soybeans and the price of fuel and fertilizer, they are going to have to come out with a pretty decent number to get barley grown up here again," he said.

In looking at feed barley prospects, he feels there will be little news to cause any upward tick in feed barley prices. As mentioned earlier, some contracted malting barley has been rejected and will go for feed. Also, he noted that feed barley generally follows corn prices and corn is cheap right now.

A check with local elevator prices indicated feed barley prices remained mostly unchanged, but malting barley prices advanced by as much as a dime at some locations. Information posted on smallgrains.org showed a spread from $1.24 to $1.42 a bushel for feed barley, while malting barley posted a range of $1.70 to $2.05 a bushel.


30 September, 2005