Lethbridge barley prices are seen continuing to weaken as the ongoing harvest and ideas of above-average crop production have been bearish.
“We’re still in a downtrend,” said Jim Beusekom, a grain broker at Market Place Commodities at Lethbridge, Alta. “Lethbridge barley is trading in the $170-$180 per metric tonne range today, so we’re losing a good $5 to $10 per metric tonne a week. We’re not going to zero, so it’s going to have to stop one of these days.”
According to Statistics Canada, barley production is expected to rise 12.4 per cent in 2013, to 8.8 million tonnes.
However, Beusekom said, prices should start to stabilize in the coming weeks as the western Canadian harvest wraps up, but a rally is not expected unless export demand picks up substantially.
“There’s too much feed around, that’s the problem,” he said. “In order for the market to rally, there has to be demand other than the domestic market. We need to see barley exported to take some of the supply away from livestock feeders, particularly here in southern Alberta.”
Another possible bearish factor that could further affect barley prices is the beginning of the U.S. corn harvest, Beusekom said.
“We actually have not had any effect from the U.S. corn harvest yet, so we’re not seeing barley compete against corn or corn DDGs (dried distillers grains) yet,” he said. “If we see corn distillers come back into Lethbridge and compete against barley, it could go down lower yet.”
However, he said it would be unlikely to see U.S. corn up in Alberta unless there is a short supply of feed — and there isn’t this season.
“Corn doesn’t normally come here unless there is a short situation on feed, so I wouldn’t expect U.S. corn to price competitively here,” he said.
“How are we going to fit in corn distillers in such a saturated market? We still have wheat competing for a home in the feed market too, so we’ve got barley, wheat and potentially corn distillers.”
Beusekom added the lowest to which he could see Lethbridge prices drop is the $150-$160 per tonne range.
— Brandon Logan writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.