Malt Barley

[jd3007]

I have barley that wasnt accepted for Malt in 2009 and am considering buying out a $2.25 picked up feed contract and resubmitting in the fall of 2010. Any thoughts?

[charliep]

I would be cautious in making sure the barley is in selectable. What was the factor that prevented from getting selected last time? Do you have a maltster/exporter that is willing to commit to taking it as malt in August?

Don't know your location but feed barley could get interesting this next year. Compare what is likely to be produced to a consumption forecast (feed and malt) and this will show extremely tight supplies. Your risk factor is US corn with the crop in exception condition (noting comments about Iowa). Depending on wheat quality this fall, will have US corn coming north in 2010/11 and this will limit gains in feed barley prices.

[SASKFARMER3]

Get this we have malt to Canada Malt and Richardsons. Delivered and paid. But with the shitty weather Canada Malt is worried about malt for 2010. Would love to buy now to fill our 2010 contract. But our lovely CWB says those boys (us) have got enough malt this year and no more, even if a company wants the product. Yea nice system. So we have to store till August 1st then Deliver stored product to Canada Malt. Love the CWB and all its wisdom.

[charliep]

Just curious if there is any cashplus malt barley contracts being offered by maltsters/exporters. Would seem to be the solution to end of the year malt barley sales opportunities.

[charliep]

Perhaps part of the reason is to squeeze the two selectors you mentioned to take existing contracts. An issue in the past is the ability to walk on contracts for a quality issue (real or otherwise) but continue selecting from other farmers.

SK3 - Just curious as to why you would take a pooled price for your malt barley and not push for a cashplus. I'm assuming that is the case by the way. I see people complaining about the pooling system but they don't use a product like cashplus to get money up front (or at least have not done their homework in terms of offered price). The CWB tells me (gov't guy) that farmers indicate their preference for the pooling system over cashplus by usage. If there are contract issues on the CWB or selector side (i.e. not offering), this highlights another issue that can be resolved.

[charliep]

My advive to you is if you can buy it out and hold. You should not lose in the feed market either way as the livestock section "slowly" crawls out of a long troublesome term.

Like Charlie said, unless your spec's are so out of line, my feeling is that your barley will all of a sudden be "good enough"

[charliep]

One thing I would look at in my decision is the CWB PRO (June version out today). New crop 2 and 6 row new crop forecasts are $3.20 and $2.75/bu ish (before trucking allowances, VIP, low protein premium, etc and assuming a $60/tonne CWB deduction). You need to subtract the cost of pain in buying your contract out and include this in your evaluation of whether to proceed.

[Hopperbin]

Charlie how are our competitors doing for malt supply like Australia and Europe, just thought I would ask as I am not up on that and do not grow barley this year but just wondering just the same.

JD3007 can you get the specs on the malt you submitted this last year? Would help to decide also. One thing we know is barley acreage is down, and around my place it is yellow a lot. Perhaps a lot of thin stuff to come. Our area seems to grow a lot of malt many farmers get 80 percent or better acceptance over the years, she is yellow.

[Hopperbin]

I don't think cwb pro should even be considered. They are most likely out to lunch and disconnect.

[SASKFARMER3]

Charlie we had a contract with Canada Malt they took all contract the CWB board wont let me over deliver to them.

[Burbert]

Cashplus, sucks, unless you's live next door to the maltie. Tooooooo, much red tape, fine print allows maltie to slip away from any commitment to honor contract.... Malt barley will get more and more interestin as the days pass. What was no good last year, all of a sudden looks best this year again. What a total BS system, the maltie system is. Unless yous is the perfect farmer who always does everting right, and your grain is bein demanded bay all, lake Saskboy. CWB is the only ting that is standin in that boys way, it seems. Most boys and girls have said F@#K malt barley and are movin on....

[charliep]

E-malt is my source for information on European malt barley. Nothing on qualtiy. Will have to get ianbens help if he is monitoring. Note the flooding in NE Europe (Northern Germany/Poland).

Quote from E=malt:

EU: Coceral projects EU barley output at just 55.3 mln tonnes this year
European trade organization Coceral has cut its forecast for barley production in the EU-27 from 56.6 mln tonnes in March, to 55.3 mln tonnes in the latest June estimate.

The total production in 2010 is well below that of 2009 which is estimated at 62.1 mln tonnes.

Spring barley production is forecast to see a large fall in the EU, with 28.1 mln tonnes forecast for production in 2010, down from 31.7 mln tonnes in 2009.

Of the main barley producing nations in the EU, France’s barley output is expected to reach 10.0 mln tonnes this year, versus 12.97 mln tonnes in 2009. Germany’s 2010 barley crop is also expected to be lower than last year, at 10.6 mln tonnes (12.29 mln in 2009).

UK barley production is estimated at 5.12 mln for 2010; this represents a 1.63 mln reduction in barley output on 2009. Spring barley production in the UK is forecast by coceral to decrease by over 1 mln tonnes to 2.8 mln tonnes in 2010 from 4.18 mln tonnes produced in 2009.

[parsley]

charliep, I'll add this for you...a report from Tim at Munton's in England that he sent to me a while back if it's helpful to this thread. I took out the graphs. If anyone wants them email me.


"Market Commentary: Malting Barley - 16 June 2010


2010 Crop Malting BARLEY

The market is very quite at the moment with no selling interest and a shortage of buyers. Most of the trade and farmers are now prepared to wait until harvest to see if things improve. The feed wheat prices have eased off by up to GBP5.00/tonne since the much needed rainfall last weekend and malting barley prices are now more bearish as the bulls head for the hills.

The feed market will determine whether malting barley prices strengthen or weaken does over the next few weeks. The feed wheat market has responded to the rainfall with a weakening price but pulling against this is a potentially strong demand internally for the new bio-ethanol plants and from the export market due to the weakness of the GBP.

The rising demand for wheat from the bio-ethanol sector is a new and serious threat to malting barley because this gives a solid option and alternative to the farmer.

- The Ensus plant on Teeside is now operating and has an annual demand for 1.2 million tonnes of wheat

- The Vivergo plant in Hull is being built and will commence production from Jan 2011 with a annual demand for 1.2 million tonnes of wheat

- There is a plant at planning stage at Immingham which is due to commence productions in 2012 with an demand for 600,000 tonnes of wheat

- All three plants are located or being located on the East coast of England

- UK Exports of wheat are at about 2.3 million tonnes annually and this new demand will reduce the exportable surplus. It won’t take it all out because depending on the types of wheat grown, there will still be a need to export some types of wheat and import other types of wheat. All of the above three bio-ethanol plants are either built or are going to be built portside that imports and exports will be viable.


- Also, the wheat that is used in ethanol production will not be entirely lost because the ethanol factories will still be producing feed as a co-product. The additional availability of feed will affect the price and indirectly affect the maltsters as co-product income falls

- But there was a big wheat crop in 2009 and there is likely to be an even bigger crop in 2010. However, looking ahead at the forecast increased demand for food and feed from developing countries with rising populations, the development of an additional industry creating ethanol serviced from wheat (in Europe) and maize (in the USA and Brazil) is a competition for food and land that is not helpful

- The technology needs to move on rapidly from 1st generation ethanol production using cereals to 2nd and 3rd generation which will use wood chips and algae. This is called cellulosic transfer but the technology needs much more investment and doesn’t look likely to happen before 2015

- If and when this technology becomes available then the requirement for maize and wheat will level off as demonstrated in the separate presentation. However, the timing of 2nd and 3rd generation ethanol technology is too optimistic in this graph.


For malting barley, the anticipated volumes and acceptability for malting please see the table below. It will be a reduced crop from the 2009 crop but the total will be back to normal levels. With a fairly evenly balanced supply/demand position for the UK based on average yields, a short position could develop if we get an extreme weather condition between now and harvest that will affect the yields. With only just a month to go before harvest of the 2 row winter crops starts, the yields will by now be determined.




What other factors might affect the price of 2010 crop malting barley at this stage:
- Stock levels: it is believed that most stock has now been traded out to the feed market. The farmers have to free up their bins in anticipation of the new crop coming in and also their requirement to turn their crops into cash
- It is still too early to tell whether it’s going to be high or a low protein year. Given the weather pattern we have had with a very dry March, April and May it is expected that it will be quite a variable crop across the country and will depend on the land and rainfall received (rainfall has been quite localised)
- Will the maltsters demand for malting barley increase from the 2010 crop? This depends on the demand position of the brewers. Some Industry reports are quite pessimistic about growth in beer sales going into 2011 and with stocks of malt being carried through we anticipate that maltsters utilisation rate in 2011 will be running at about 90%.

We will see harvest pressure to move barley but it’s always short lived and limited tonnage and if the price is low farmers will find some stores to put it in.

If there is no support from brewers in July/August, which is when farmers will be making their forward decisions, then they will not grow it. This will reduce the area again going forward and tighten up the supply position. Malting barley growers have the choice to grow very high yielding feed barley varieties like Cassia or Saffron if they need barley in their rotation.

It is believed that spring barley will hold its area for 2011 because farmers don’t have a better alternative. The only real problem for spring malting barley is if farmers drill large areas of wheat because of high demand from ethanol and it’s an easy crop to grow with less risk.

With a decline in the area sown to malting barley, by up to 20% in the UK and by varying degrees in other European countries, there are concerns that there could be a short market if there is weather condition.

The current forecast for 2010 production levels of malting barley is as per the graph below which shows a return to a normal area. However, the question remains as what the yields will be like? If there is a drop in yields then are we going to see a short position in the supply and demand balance?



Current harvest prices indicated are in the region of:

- 2 Row Winter malting barley: GBP105-110/tonne delivered harvest/Nov
- 2 Row Spring malting barley: GBP110-115/tonne delivered harvest/Nov

Harvest FEED barley is currently around GBP95/tonne delivered.
There are not many willing sellers at these prices and farmers chose to wait until harvest when they hope for a rise.

Growers are concerned about the big price swings that we have seen in the last 3 years and the gross margins from other crops are currently better than malting barley." Pars