2011 malt barley situation

[charliep]

Interesting article from E-malt.

USA: Malt barley contract prices need to strengthen for 2011
Contracts for 2011 malt barley production are now being offered, and the board of directors of the North Dakota Barley Council believes contract prices will need to strengthen to entice growers to commit acres to malt barley production, FarmAndRanchGuide informed on October 26th.

“While initial contract price offerings are disappointing, we are hopeful that prices will strengthen so that barley can be a profitable crop enterprise in 2011,” states Barley Council board member Charles Ottem.

“The decline in acres of barley production in North Dakota clearly demonstrates that barley is not profitable compared to other crop enterprises available to growers”, states Jim Broten, chair of the North Dakota Barley Council. “Each crop we raise has to generate a profit. Barley has significant advantages as a rotational crop, but the down side risk of not securing malting grade, along with extended storage periods places growers in a difficult financial situation that they simply can’t afford.”

Current contract price offerings for 2011 malt barley are in the range of $4.40 to $4.90 per bushel. “Malt barley prices will need to be substantially higher to compete with corn, canola, wheat, and soybeans,” says Doyle Lentz, vice chair of the Barley Council.

[parsley]

H M Gauger, Berlin says this about malt barley:

"Malting barley calls for very special attention:
The EU experienced a crop failure in large areas. On paper the deficit is at least half a Million tons.

However, the deficit is calculated against an average usage of our malting capacity of 80 %. Recent figures prove that 85 % is more correct, i.e. almost 700.000 tons more barley will be needed.

There was an exceptionally large carry-over from crop 2009, which improves the S/D balance by up to one Mill. tons. But there is also the fact that Danish, German, French, U.K. malting barley (winter barley, old crop barley, weather-damaged barley) were exported as feed barley. The premium of malting above feed barley has been insufficient for months, inciting farmers and co-ops to choose the easy and high-price sale into the feed sector.

Present markets are for 2010 crop malting barley:
French 2rs, basis July,
FOB Creil EUR 208,-, FOB Moselle 217,-, Danish and U.K. 2rs, basis October, FOB seaport, EUR 205,-. French 2rw and 6rw, basis July, FOB Creil EUR 190,-/195,-. French and German FEED BARLEY, delivered seaports, EUR 190,-. "

Demand for feed barley will remain brisk.


"There is another great risk: Farmers will be disappointed once more by malting barley prices as compared to alternative grains, production in 2011 may easily shrink once more. The latest market story is about failing germination, reports from almost all countries of the EU warn of existing or threatening problems." Pars

[parsley]

More from H M Gauger, Berlin on malt barley situation in China :

"The Chinese crop was 1,2 to 1,25 Mill. tons of malting barley, the carry-over 250.000 tons.

Demand in theory is 3,6 Mill. tons. Imports in 2010 are 1,66 Mill. tons in Jan-August and will reach 2,2 Mill. tons by the end of the year.

Next year’s imports are forecast smaller, as Chinese industries will react negatively on high price levels."

Here's what he says about Aussieland:

"In Australia a good crop is ripening in the South and East of the country, only the West will be affected by a long dryness in winter and spring. Australia should be in a position to export 1,5 Mill. tons of malting barley plus large quantities of FAQ or germinating feed barley."

And Argentina:

"Argentina received variable, but altogether good precipitation during the vegetation period of barley, a crop of 2 Mill. tons is anticipated.

"Russia is expected to import 300 - 500.000 tons of crop 2010, maltsters started to purchase in Scandinavia."

So...this is encouraging for Western malt growers"

"The overall S/D balance of the world is definitely SHORT, low quality barley must fill the gap.


" Markets are not easily predictable, but we daresay that another steep price increase is likely. The new market level would then also be the starting price for the crop year 2011/12. Malting margins may still be depressed, but malt prices may rise well above the EUR 400,- mark. " Pars

[parsley]

Canadian Market Commentary – IMBM Ltd, Winnipeg, says the following about malt barley:

"Unfortunately selection rates have gone down due to quality and Canada has to be concerned if we have enough malt barley to meet even the domestic's needs.

Due to this high chitted crop we have to worry about how will this barley perform in the malt house next May-July 20011 ????

The only saving factor is malt production in Canada is not running at full capacity, all maltsters should have gone long with old crop, and so they should not have to buy too much of this lower quality barley for their production.

I'm sure a lot of barley has already moved from the US to Canada and more will follow as we see this Canadian barley crop deteriorate throughout the year. Barley that germinates today will probably not germinate next June!

Current CWB in-store VC/TB is $313/mt"
Pars

[charliep]

Thanks Pars

An interesting year.

Just curious. If someone offered you a $5/bu new crop (read 2011) malt barley contract (or heavan forbid a cash plus) with an act of god clause, would you contract some of next years production? How does $5/bu malt barley pencil relative to $11/bu canola.

[parsley]

Cereal crops were flooded in:
*Hungary
*Czech Republic
* Hungary
*Romania
*Slovakia
*Pakistan
*Scotland's spring barley crop 30% gone
*Nigeria almost decimated

So if the cereal crops are short, farmers will grow them. And grow feed barley.

And that begs the question: Where the hell will a maltster be able to buy malt barley? Pars

[parsley]

No.

We grow a specialty barley for a manufacturing firm in the US MidWest, and supplied them for over a decade.

[furrowtickler]

Back to your first post charllie, Imagine the market having to actually pay a little more to get farmers to increase acres - what a novel Idea. The borg starts out with the exact opposite approach low ball the price then try to make it up over the next 18 months.
Good post BTW.

[wd9]

had some 86 percent germ barley rejected as malt. They aren't very hungry just yet.

[tipsy]

Charlie to answer your question. NO. Myself and probably 1000's of other farmers continue to refuse to grow malt barley, regardless of price as long as the cwb continues to be a useless middle man.
This continues to be pointed out in the cwb's yearly info surveys. But this info seems to have no effect or consequence too the cwb board of directors who always demand that the farmers must control and decide the future of the cwb.

[charliep]

More information from emalt.

Australian weather will determine the future of malting barley prices, with forecast rains holding the potential to dash expectations of a price falls, the Canadian Wheat Board said earlier this week.

Australia's overall barley production looks on course to top 8 mln tonnes, a level high by historical standards, and more than the 7.6 mln tonnes the US Department of Agriculture is forecasting, the board said.

"It has the potential to put significant pressure on world malting barley prices," the CWB said.

However, recent rains, a continuation of the moisture which has encouraged "bumper" yields, are already raising fears of crop downgrades and "causing concern about the eventual amount of malting barley available".

And further rainfall looks imminent, Luke Mathews at Commonwealth Bank of Australia said, citing moisture levels as the "primary threat to east coast crops".

"Grain quality will deteriorate for northern New South Wales and Queensland crops, while yields in southern New South Wales and Victoria are liable due to forecast heavy widespread rain this weekend," he said.