Now that the barley harvest is over, traders can assess the supply and quality situations that will ultimately determine future market prices. Already the feed barley market has seen a slight downward movement in prices due to the large supply and the desire for growers to move some of the barley crop to market to make way for the upcoming row crop harvest.
"We have seen prices for feed barley fall from a nickel to a dime over the past few days," said Randy Brag of Valley Grain Milling in Casselton, N.D. "That puts the current cash feed barley market price in a range of $5.15 to $5.50 a bushel."
He lists two factors that are putting downward pressure on the feed barley market - the need for farmers to move some of the new crop barley off the farm due to lack of storage space, and a shrinking demand for feed usage.
"At the current livestock prices you can't afford to feed $5.50 feed barley," he said, "so many are switching to things like feed wheat and even oats to put in their ration. In addition, many of the customers I deal with don't want to pay any more for their input costs than they did last year and if they have to pay more than they did before they start looking to change their rations."
Brag supplies processed feed barley to the pet food industry.
In the near future, he expects feed barley prices could inch down even further, as the numbers from the corn harvest start coming in. If the size of the crop is at or above the expected level, there might be further weakening of the prices offered for feed barley. However, he noted, if harvest totals come in under what the trade expects for corn, this could prop up feed barley prices slightly.
Malting barley growers are waiting to see what prices will be issued at for 2013 contracts. Historically, Busch announces their malting barley contract prices during the Big Iron Farm Show. Brag said contract prices this year will likely be lower than those offered last year, which started north of the $7 figure last year.
He based that prediction on the following facts:
*The brewers are using more two-row barley in their beers, which means more barley coming from Montana, Idaho, Alberta and Saskatchewan. Meanwhile they have reduced their usage of six-row barley, which is mostly grown in North Dakota and northwestern Minnesota. Areas where the two-row barley are grown typically are not big corn and soybean producing areas, while the six-row growing area has major competition for acres from corn and soybeans. Therefore, if more of the barley for malt is grown in the two-row production area the malting contracts will have to compete with wheat for acres, not corn and soybeans. And Brag said it won't require such a high price to compete with wheat in those areas for acres.
*There was a good crop of malting barley this year and the selection rate was very high due to the good quality of the crop, Brag said. And some of the maltsters may have over contracted acres for 2012 so they wouldn't see themselves in a short supply situation again, like they had last year.
"So they are going to have some extra bushels on hand," he said, "but they are still going to need to contract some barley."