Malt Barley Outlook

[rain]

Charlie what is your spin on Malt Barley. What do you think it might bring this year. Feed Barley is looking good. Tough decision as what to do this year.

[charliep]

Current special select malt barley pool return outlook (AB. ave.) $3.50 to $3.60/bu. Likely to improve with $3.75/bu reasonable and $4/bu likely too high (depends on sales last spring and summer). Will depend on how aggressive EU is with malt product sales and Australia with seed sales (have to do research on Aussie weather but I think has been okay in main barley growing regions). If Canadian prices get to high and not able to fill low protein requirements, countries like China will likely buy more EU seed (quality just above feed but will be made to fit if prices for alternatives are too high). Spread between 6 and 2 row has potential to narrow for Manitoba guys.

As indicated in a previous thread, we have a protential market barley market of 2 to 2.4 MMT (domestic 1 MMT, US 600,000 to 800,000 t, China 500,000 to 600,000 t). That is 20 % of our crop.

Quality (from what I hear) is amazing good all things considered in many areas (plumpness and bushel weight). Protein is a problem with most samples well over 12.5 %. As a note on protein, levels above 12.5 % (particularly in international markets) makes malt barley and malt product unuseable.

These are the facts as best I know them. I will leave for others to comment on strategy (I will kick in my two cents later). Brenda also started a thread regarding the grain companies street malt barley program and changes to CWB contracting. Comments.

[rain]

$3.75 Malt Barley does not sound to appetizing. You can book $3.59 delivered Calgary region 0% shrink for February. Where going to waite and see what the PRO is at the end of the month. If know change in Malt barley we will sell a good percenta as feed.

[charliep]

I promise to stay out so others can comment but the point needs to be made that current barley prices are effectively rationing demand (cattle potentially moving elsewhere/demand problems on the meat in general because of the economic slowdown/robbing from the malt barley market) and making alternative feeds much more attractive (US corn, CPS wheat, oats, etc). This fact will limit what can happen with feed barley prices down the road. Putting todays barley price in your pocket is a good strategy.

[crusher]

My view on the barley situation is that feed prices look pretty good now and advances will be limited by corn. If I were bullish barley/feed grains, I might be selling my barley and buying corn calls. I don't think barley is going any higher without a push from corn.

Kind of reminds me of canola during the summer when canola was $8.00 many analysts were sitting on the fence when they should have been pushing sales. If you're making a profit at these prices, sell some. The cash might be nice to have.

[TOM4CWB]

On Malt Barley Pricing,

Is there any reason why Malt Barley should not be priced on a premium basis to the Lethbridge futures?

I cannot believe that an Malt Buyer would not pay at least a $20.00/t premium to the Lethbridge futures, for high quality Malt Barley, or have I missed something?

Why is the CWB not smart enough to put this type of pricing option together?

I though these guys claimed the were master marketers?

If as the CWB claims Lethbridge futures are the basis for the highest barley prices on the planet, and the CWB monopoly means anything, why can't the CWB simply use this market as a basis for pricing, just like they use Minn. Hard Red Spring, for our CWRS Wheat pricing at a premium to the futures???

[charliep]

I will leave for others input other than to comment they are very separate markets that respond to different supply demand factors and a different buyer competitor market. Under the current system, you also have understand pricing to domestic maltsters for domestic use/malt product exports. In a previous life, I had to review/establish the price/spread relationship between 2 and 6 row malt barley in the pooling process. This is difficult in itself as they are also separate markets and respond to different fundamentals. My thoughts are that these two markets could easily be run as separate pools (assuming barley stays with the CWB under pooled pricing).

I still haven't seen any comments on Brenda's question. Is the delivery side/signal from consumer side of malt barley working? Have the recent changes to malt barley contracts/delivery opportunities been positive, negative or some combination thereof?

[bbrindle]

Yes, I'm interested in hearing comments about the current system -- please post them in the other thread. Maybe here we could talk about a future system. We've had one suggestion - that malt be priced as a premium to feed. I'm not convinced it can't be done. Doesn't it happen with oats all the time? Worth examining.

Also, what if malt barley was handled like feed barley - with the CWB & the open market? Then the #2/#6 difference would start to sort out, if plants bid for their product needs and the premium to feed would be clearer..

[ianben]

Hi All
Here in UK malt is priced as a premium to feed and different specs attract different premiums.

Premiums vary with supply and demand so sometimes getting a high premium lot acccepted when the market has dropped can be difficult.

Buyers usually seem to be able to find something wrong in this situation.

As Tom said who said life would be fair!

Regards Ian