Winnipeg | CNS Canada — Barley prices in Western Canada have seen a bit of a rebound rally recently, but that trend is not expected to stick around.
The recent price climb was sparked by a stop in farmer selling and by ideas that the market dropped too low, too quick, Jim Beusekom of Market Place Commodities said here during a presentation Monday at the Wild Oats Grainworld conference.
“But the rally is over as soon as the farmer starts selling,” he added.
Over the next six months, prices are expected to be stuck in a downtrend, with ongoing logistics issues also plaguing the Canadian barley market, Beusekom said.
Though much of the barley in Alberta moves by truck, logistics there have been a problem as well due to large supplies.
Trucking logistics are expected to get worse in the spring, because there are a lot of secondary-grade roads in Saskatchewan and muddy conditions would make it hard for trucks to get into farm yards, Beusekom added.
Barley prices also follow corn prices, if they follow anything, and corn is looking at lower prices for the next three years, he said.
A lot of farmers are also feeding more wheat to cattle this year because of lower prices for that commodity.
Domestic demand for barley is still strong, however, because of the more positive outlook for the Canadian cattle industry this year.
Barley is also cheaper than most feed commodities, other than wheat, which will keep prices from dropping too low going forward. The Canadian dollar, as long as it remains in the low-90s range in U.S. cents, will also be supportive.
In order to keep the market from crashing significantly lower, Canada needs to maintain and grow exports of barley, Beusekom said, adding that Canadian farmers can export it once rail logistics clear up.
He advised farmers to figure out what they want for old-crop, and to sell both old- and new-crop now, because it’s not likely that prices are going up.
If the market experiences some weather premiums in the spring and summer of 2014, Beusekom said farmers should sell barley to take advantage of the bounce, and not confuse it for a price trend change.
— Terryn Shiells writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.