Canada Markets

Feed Grains Slow to Come to Market

Cliff Jamieson
By  Cliff Jamieson , Canadian Grains Analyst
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Despite ample feed supplies on the Prairies, feed barley continues to rally, with reports indicating a $185/mt cash bid in southern Alberta today, up $21/mt from the $164/mt weekly low reported for the week of Sept. 15. (DTN graphic by Scott R Kemper)

The southern Alberta barley market has rallied through harvest, while yesterday a $183 per metric tonne price level was reported and today there's suggestions it's now $185/mt. This is a stark contrast to the $164/mt weekly low reported for the middle of September.

Barley fundamentals are extremely tight. This month's Agriculture and Agri Food Canada's analysis of the barley market discusses a record low seeded and harvested acres, record low production, a near record low supply and a record low carryout. The current carryout estimate for 2014/15 of 700,000 mt is down 1.2 mmt or 64% from 2013/14, while also below the five-year average of 1.621 mmt and the 10-year average of 2.085 mmt.

Despite the tight supply of barley, a number of factors that will act to limit the upward potential of the market:

1) An expected reduction in exports. The current estimate is 2 mmt, down 16% from last year.

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2) A reduction in the volume of barley accepted for malt.

3) Exports of feeder cattle. Last week's Canfax Weekly Feeder Summary indicated that last week's exports totaled 14,093 head, while year-to-date numbers are reported to be well above the numbers shipped over the past five years.

4)Supplies of feed quality wheat and durum.

While overall supplies of feed on the Prairies may be more than ample, producers are far from aggressive sellers. While this has worked in their favor in the past month, the onset of winter weather may hasten selling activity in order that grain on piles and temporary storage are cleaned up and weigh on the market.

As shown on the attached chart, the barley market has retraced 39% of the move from the weekly May weekly 12 high of $218/mt to the Sept. 15 weekly low of $164/mt to reach the current $185/mt bid. Should this rally continue, a test of the 50% retracement of the same downtrend may be in order, with a test of resistance at $191/mt a possibility.


Have grains reached their lows? We'd love to know what you think! Please share your thoughts on this week's DTN 360 poll found on your DTN Home Page.

Cliff Jamieson can be reached at cliff.jamieson@dtn.com

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