Jeff Nielsen considers himself one of the lucky ones — he got all his barley off before winter-in-September weather arrived and knows it’s malt quality.
“If you got it off before all this crappy weather, you may have malt. If you still have barley now, it’s very doubtful that you have malt,” the Olds-area producer said earlier this month.
But Nielsen’s luck only goes so far. Malt prices are unlikely to go up much even though snow and rain will see a big chunk of the acres seeded to malt varieties downgraded to feed.
“By no stretch of the imagination is there as much good barley as last year,” said Kevin Sich, supply chain director with Rahr Malting.
However, Sich said he has secured sufficient supplies and although he doesn’t know about the situation of other malting companies, he’s not hearing of shortages.
“Saying we don’t have enough at the moment… I don’t know if that’s a fair statement right now until we wrap this harvest up.”
Part of that is because malting companies had good supplies from last year, said Jerry Klassen, manager of Canadian operations for Swiss-based GAP S.A. Grains and Produits.
“Last year’s crop was very high quality,” he said. “They had extensive coverage into new crop positions. We’re not seeing active buying by the domestic malting companies so far.”
Everyone in the malting industry is watching the situation closely as there are many factors at play when it comes to malt barley hit by bad weather. While freezing kills the germ, cold reduces germination activity and development of fungi. However, barley under a heavy snow will be pushed into the ground, and have a greater chance of sprouting.
“When the snow comes, it puts the crops flat, and keeps taking the quality down,” said Sich.
Protein may also be an issue this year, said Nielsen, who is a director with the Alberta Barley Commission.
“When it’s drought stressed, you generally get higher protein levels in your barley, and I think a lot of the maltsters want around 12 to 13.5 per cent protein in their barley,” said Nielsen.
However, in poor growing years, malting companies will sometimes drop their requirements on germination a bit.
“They will have to make some concessions,” said Klassen. “We are not hearing of any rejections so far. If you put yourself in their shoes, if they reject what they have contracted, where are they going to find better malt barley? That’s the problem.”
However, malting companies only have so much leeway.
“You could have brewers saying they can’t accept the quality, so we have to be very transparent,” said Sich, adding he talks weekly with brewers he sells to.
“A lot of the times our brewers will set our spec. Brewers are smart and know what the quality of the western crop is. It is what it is, is the best way to word it.”
Malting companies need a two-million-tonne crop to fulfil domestic demand, he added.
“I’m sure we could use more if it’s available,” Sich said.
The potential for higher sales, both domestically and abroad, is another factor that will be rued by growers who will have to sell their malting varieties as feed. Canada often exports 500,000 to 700,000 tonnes of barley offshore, with most of that going into China. But there is potential this year to ship more because of weather woes in other regions, such as drought in Australia.
“We actually have a growing market overseas, particularly in China, due to the Australian crop not being that good,” said Nielsen. “I’m hopeful we can still meet it, it would be great to ship more Alberta barley.”
Klassen figures malting companies will be able to find enough for domestic use, with another 800,000 to one million tonnes available for export. But prices aren’t expected to soar.
“The (export) companies were aggressive on securing supplies earlier, so it doesn’t look like anybody was really caught short in the market right now for malt barley,” said Klassen.
“The exporters and the domestic malting companies are fairly well covered.”
On the feed barley side, the question isn’t if there will be enough feed grains this year in Western Canada, but rather when will it be ready.
“The question is, when will it be marketable? When will it be out of the field and in condition to market?” said Allen Pirness of Market Place Commodities in Lethbridge.
Cheap corn from the United States has been making its way into Alberta feedlots lately, which is helping to keep a lid on prices. Feed barley, feed wheat, and corn are all sitting around the $245-per-tonne mark, said Pirness.
“(The corn price) doesn’t allow for barley and wheat to get too much above corn, or else we’ll just see a bigger replacement,” he said.
Snow has caused some delivery issues, but that hasn’t affected the market much, he added.
“There’s some near-term demand where stuff can’t show up and they’re buying what they can to make it through until stuff starts showing up more regularly,” said Pirness. “It’s not critical, there still seems to be enough grain getting to market.”
As with malt, the amount of feed barley is sufficient to satisfy Canadian domestic demand, said Klassen.
“The market for feed wheat will be pretty flat this winter,” he said.
However, supply will remain tight because of dry conditions in Europe and Australia along with production declines in Russia and Ukraine, he predicted.
“The world feed barley market is fairly strong compared to past years,” said Klassen. “In past years, the domestic market set the price for feed barley in Western Canada. When you move over the winter period, and look at the supply and demand for barley and the supply and demand for corn, you’re going to see Western Canada export more feed barley, and feedlots will be using more corn than usual.” — With files from CNS Canada