Feed barley due for spring rally

Barley has been undervalued compared to feed wheat, 
but any price increases are likely to be modest

Feed barley in Western Canada usually sees a spring rally at this time of year, although the uptrend this year will be limited by large supplies still overhanging the market.

Feed grains had trended lower through late February and into early March, with feed wheat leading to the downside.

Losses in feed wheat spilled over to weigh on barley, but “now it’s feeling as if the market has found some support and is starting to make a turn,” said Kyle Sinclair of CorNine Commodities at Lacombe.

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Barley was undervalued compared to feed wheat, he said, with tight feed wheat supplies causing some end-users to shift their rations out of feed wheat and into more barley.

“Going into the spring is typically a rallying time for the (feed) market,” said Sinclair, pointing to spring road bans, soft yard conditions and the slowdown in farmer selling as producers shift their focus to seeding. From a coverage standpoint, demand is solid, even for April.

However, he added, the one caution this year is in the amount of unpriced barley being held on farm.

“While I think you’ll see a rally, it could be short lived,” said Sinclair, as producers were still holding on to large supplies that would probably be released at prices about 20 cents per bushel above current levels.

With many areas of Alberta still on the dry side heading into the growing season, he expected the longer-term direction for barley would depend on moisture conditions later in the growing season.

If moisture levels improve over the next three to four weeks, the spring rally may be the best prices for some time.

However, if the rain doesn’t come, growers may be able to sell some old-crop barley for higher prices during the summer weather market. Waiting for a weather rally is a gamble, and producers shouldn’t leave themselves 100 per cent exposed, Sinclair said.

About the author

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Phil Franz-Warkentin writes for MarketsFarm specializing in grain and commodity market reporting.

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