Production challenges in the Black Sea region, coupled with rising corn prices, are pushing feed barley prices higher. Values were up 3 dollars in the Canadian Wheat Board's September Pool Return Outlook (from the CWB's September 10th mid-month PRO.)
"Feed barley continues to move higher. Reduced supply from the Black Sea region..., reluctance in the European Union for farmers to sell their barley, and overall, when you have corn prices going up, it's all very supportive of the entire feed complex," says Neil Townsend, market analyst with the CWB.
He notes the market is still anticipating some significant demand from Saudi Arabia.
"If you look where the feed barley is located, there are ample supplies in the European Union and obviously they have a considerable freight advantage to the Saudi market so it's just a matter of timing for Western Canada," he says. "That being said, with corn prices increasing and that strength looking like it's going to be there for a considerable amount of time, the entire feed complex - barley, wheat and corn - is going to be traded at higher levels than it has been in the last couple of years."
Meanwhile, on the malt barley side, the CWB is still expecting increased demand from China. "China has been fairly quiet but it looks there should be a lot of demand coming. The question is, will they try to delay it until the Australians move toward harvest? Their thought pattern may be, if the Australians have a quality barley crop, then instead of shopping in one store they're shopping in two stores and potentially lowering the price," says Townsend.
On the supply side, malt barley supplies are tight, mainly due to poor production in western Canada and the EU. Designated barley values were unchanged in the board's September PRO.
~ Tuesday, September 28, 2010 ~