European Barley Crop Status

[rain]

Charlie, have you heard any thing about the EU barley (malt) crop this year yet. I am wondering about condition and acres compared to last year at this time.

Thanks

[charliep]

Winter barley acres in Europe are up and crop conditions have been favorable. The spring barley acreage is down but weather has been reasonably favorable. No big issues there. A note is the EU have recently started applying export restitutions (export subsidies) to both malt product and malt barley grain (similar to the circumstance for wheat).

To talk about other competitors, Australia is dry with concerns about the threat of el nino. Barley acreage would appear to be down. The Aussie farmer is just in the early process of putting this crop in the ground.

Here at home, much of the Sk. drought area is prime malt country - unless there is rain, the outcome may be lots of 44 lb barley with 13% plus protein.

An interesting year ahead. Depending on your comfort level on the production risk side, likely a profitable year for malt barley.

[rain]

Charlie do you think this crop years Malt values can get close to last years. Right now its a 30 dollar spread in the PROS

[charliep]

I think they are too negative on malt barley given what we know today (particularly on the 2 rows) but that story has yet to be told. A price of $175/t for standard select 2 row would mean an elevator price of about $2.90/bu (based on $40/t CWB deductions). You can likely lock in that price for new crop barly on this rally in the Calgary area.

A note as well is they narrowed the 2 row/6 row spread to $15/t, down from $26/t from 2001/02.

The issue in Canada will be more acres versus poor weather/larger than normal used as livestock feed.

[rain]

With a Dec Barley futures of $150.00 you can price $144.00/$3.13 delivered December Calgary region for feed barley.

[charliep]

Sounds like a good price to me. Market is down hard early this am (early to push this kind of rally). A good example of why having a target price/grain pricing order is a good idea.