Malt Barley?

[charliep]

Trying to reconcile what I am reading and the PRO. Out curiousity, does anyone know whether the pricing pace model as applied to pooling applies to malt barley. Frustration as to why any marketing organization would short the market on farmers behalf the way the CWB did with no hedge strategy/protection. Someone needs to help me understand.

Emalt this week.

Australia: Malting barley premium over feed to jump to twice historic levels
The premium garnered by malting barley is to jump to twice historic levels as quality downgrades add to pressure on supplies from lower sowings, Australian officials were quoted as saying by Agrimoney.com on December, 14.

According to the latest ABARE forecast, world barley production may plunge by 17.3% to 124 mln tonnes in 2010/11, a deeper fall than it had previously estimated resulting from lower sowings and weather damage.

Drought halved output in Russia, normally the second biggest producer, to 8.5 mln tonnes, and prompted a cut of nearly one-quarter in third-ranked Ukraine. Meanwhile, lower sowings prompted 13% cuts to output in Canada and the European Union, the world's top barley grower.

However, while prospects for feed barley prices had been sapped, in Australia at least, by the abundant supplies of wheat fit only for animal rations, following heavy harvest rains, ABARE’s analysts lifted their expectation for average malting barley prices in 2010-11 to A$300 a tonne.

That would be a modestly above-average price, with the five-year mean at A$280 a tonne on Agrimoney.com calculations, if below the A$350 hit in 2007-08 during the last crop market spike.

[charliep]

Barley is driving me nuts.

1) A feedlot sector that is holding back feedgrain purchases in an Alberta market that will feel to the grain producer to be relatively flush because of the feed wheat around. Not much barley to be had in Saskatchewan/Manitoba. Likely the cattle side will return to the market in the winter and spring (still pain in hogs) given a cost per pound of gain advantage here versus US.

2) No relationship between current EPV values and the export market. No dynamics. No price discovery. No arbitrage. Nothing.

3) In a year of short malt barley supplies around the world (not that western Canada has any), no excitement or price signals. With apologies for being crude, we seem to a case of premature selling and now a flacid market with limited to no ability to respond to anything even though the environment should be very stimulating. Perhaps we need some Viagra type selling to create the mood again.

[charliep]

On with my rant.

In 2002, the CWB forecast barley production would be 15.4 MMT in 2011. Canola - 7.5 MMT. The actual situation in 2011 is canola has a chance at 15.4 MMT. Barley could easy be 7.5 MMT again. I note the thread on the canola wheat canola wheat rotation.

I know growth in vegetable demand and China on oilseeds generally is the driven. But...........

[URL="http://www.cwb.ca/public/en/library/publications/popups/pdf/long-term_forcast-2011-12.pdf"]page 6[/URL]

[cottonpicken]

I think a big part of the problem is that there is no
paper market action.

[Wheatking]

If the CWB was to give up control of malt would Ice open up an exchange for malt. An open exchange for malt would solve allot of problems with no act of god, just hedge it on the exchange and if you have a poor crop and can't meet your commitments you could just buy it back on the exchange instead of being the grain companies b****. IMO that would go along way to solving some of the problems that we have with malt today, no transparent pricing.

[Hopperbin]

Charlie thanks for pointing it out that the CWB stated that "In 2002, the CWB forecast barley production would be 15.4 MMT in 2011. Canola - 7.5 MMT." The actual situation in 2011 is canola has a chance at 15.4 MMT. Barley could easy be 7.5 MMT again.

This is something to be brought up to every director, everytime one talks to CWB on the phone, we should all phone in about this, also to our gov't, and the oppposition, someone should make a video, this should not go un noticed.
I wonder how the CWB could spin this one?

Happytrails your worried about the ethanol industry competing for your grain purchases. The CWB is handing you a huge gift this year.

[charliep]

My theory is ethanol will be good for the livestock feeding industry. The emphasis in research and agronomics will go to producing more energy per acre and competition with human consumption crops with more attributes like protein requirements. Better market opportunities/prices will equal more profit for grain farmers and expanded acres.

The first step down this road is better market signals from export markets (US and off shore) and the addition of more competition into the feed market. Heavan forbid I would suggest such a thing but maybe even hope for a Western barley futures contract that works.

[jdepape]

pricing pace only works with wheat.
Malt barley gets sold when the buyers are buying - and most buy early. The only control/restriction the CWB exerts is on malt to domestic brewers - CWB won't go out more than a couple of months at a time. (I could have this wrong - could be shorter.)

[TOM4CWB]

jdepape,

One of the most profitable money printing systems globally are the brewers... now with a Canadian bias as nationals make so much cash they buy out anyone possible. And Canadians pay for the Global buying spree.

meanwhile the CWB must lower the PRO cause the presell recked the market because of the pool.

Good barley is going to the feeder... as the brewers can not buy it away from the feeding sector... I was told in Banff. IMports INTO western Canada are scheduled for the early summer of 2011... I was informed.

Yet even talking about barley marketing proves I am mentally unstable and need to take a long walk with a cookie!

[Burbert]

Malt barley is not really needed, cause grain kin be brewed outta feed ifn the cost gets too high er whatever. That the reality!

[mcfarms]

In response to a few postings in this thread.
Wheat king liffe futures is trying a malt contract this year.
JDdepape no question the brewers are usually in trying to secure supply fron right about now into march april before the crop is even seeded however the board should not allow sales on a crop as weather sensitive as this without firm no act of god commitment from farmers or at the very least backstopping forward sales with backstopping options I would suggest looking at what diageo is doing is a good thing. The board wants the job the have a duty of care to the farmer which I believe they are failing in especially in Malt barley.

Charlie whats more frustrating about this is for about the 4th time in 10 years I have to make the decision whether to "subsidize " the board for them selling my barley without direction to do so or "subsidize" the malster with whom a have a log term and good working relationship with.
Cash plus isn't working for the farmer or the malster in it's present form. The pool system is a abject failure again this year.

And Burbert your comment is incorrect but not that you'd care or want to learn why.

[charliep]

Actually Burbert isn't 100 % wrong. China is brewing near beers (no malting barley). More use of adjuncts in North American beers. Attended the Alberta Barley Commission annual general meeting and there is a process for barley that can produce a brewable product (or at least for a percentage in the blend) without traditional malting of high quality barley.

High prices and crap quality generally make for innovativeness. These processes will likely have longer term implications for malt barley demand.

For the coneseur, good beer will always have good malt barley.