Lack of demand continues downward pressure on feed barley market Farm and Ranch Guide: Markets

Barley prices, but especially feed barley prices, remain soft due to the lack of demand, according to Randy Brag of Valley Grain Service in Casselton, N.D.

“We just don't have any real export market going on at this time and we're also trying to get barley into competition with corn, and that's just taken the price of feed barley right down,” Brag said.

“We could head down to ‘old levels,' which would put feed barley down to about $2 - we aren't that far away.”

Several factors are currently leading to the low U.S. export volume of feed barley, Brag noted, including the recent financial crisis that seems to be world-wide, plus the fact that the U.S. dollar has increased in value over the last few months.

Also, this is the first time in a few years when almost the entire world had a good barley crop, according to Brag, which means that we are now back to normal levels.

“We also got a lot of the speculators out of the market in terms of corn, soybeans and wheat, so we are not going to see the wild rallies like we saw last year,” Brag explained. “I think we are back into what we call the normal market and that's not going to be a whole lot of fun for many farmers.”

With feed barley market prices pretty much at the mercy of the domestic market forces at this time, Brag said there is potential for a little more downward action, especially when you look at the west coast feed barley market, which is where most of the feed barley produced in this region ends up if it isn't exported.

“In checking the market screen right now, in order for us to be competitive with west coast feed barley, basically it would be $2 barley to the farmer, based on the current $141 per ton price for west coast feed barley” he said.

Currently Brag indicated cash feed barley prices in the region are in the range of $2.25 to $2.80 per bushel. Prices offered for malting barley prices are in a narrow range of around $4.50 for the spot cash market with little demand for that class as well.

“What I am hearing is the maltsters need to buy a little bit of barley, but they aren't being too aggressive for what they need,” Brag said. “The guys that had malting barley contracts this year and were able to honor those contracts did real well.”

This downward slide of barley prices could put a strain on the number of acres planted for next year, especially in the feed barley side of things, Brag noted. As far as malting barley is concerned, he said the maltsters are still offering 2009 contracts that are above $4 a bushel, and that's worth looking at since it's still a pretty good number for barley.

“A few farmers have told me they are kind of shocked by these prices and are going to hold on to their crop and ride this thing out,” he said. “And I don't know if that is the right thing or the wrong thing to do. If they don't need the space or the money, it might be the right thing to do if acres do decline.

“Barley is going to have to compete against soybeans, corn and wheat again this next year for acres, and that might provide a little support, especially for the malting barley prices, but that would be only for new crop prices,” he said. “And, if all of a sudden, we see a lot of barley moving from the farm, that could push cash feed prices even lower. Malting prices wouldn't really be affected, since there aren't that many homes for it.

“Everybody is basically in the opposite mood that they were in last year at this time. Everybody wanted to buy last year, because the market was going up. Now, the buyers are sitting back and only buying what they need, because they see the market going down.

“We're basically now in a supply and demand market with no speculators,” he concluded.

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