Barley exports look strong so far in open market

Canadian barley exports are looking strong, as the end of the Canadian Wheat Board’s single desk appears to have brought more players to the table.

As of Dec. 2, Canada had exported 651,700 tonnes of barley during the crop year to date, which was up by more than 200,000 tonnes from the level seen at the same point the previous year, according to Canadian Grain Commission data.

Highlighting the international demand, Richardson International, Canada’s second largest grain company, on Thursday announced a 42,500-tonne shipment of feed barley to Japan. That sale followed previously reported business to Saudi Arabia and was cited by the company as a sign of the developing relationships with overseas customers under the new open market.

"With tight global feed grain stocks presenting opportunities for growers, we can now make the most of those opportunities by being able to ship our customers’ grain directly to the marketplace in Japan," said Terry James, Richardson’s vice-president of export marketing in a news release.

Prior to Aug. 1, 2012 and the end of the CWB’s single desk any export business went through the CWB.

"It doesn’t surprise me that our offshore sales of feed barley are up," said Brian Otto, past president of the Western Barley Growers Association. He said the shortage of feed barley in Ukraine has caused many customers to look elsewhere.

International prices were now arbitraging back to Western Canada very nicely, which didn’t happen in the past, said Otto. The transparent pricing made it easier for farmers to make sales decisions, he added.

Solid demand for feed barley was helping keep malt prices underpinned as well, said Otto, noting maltsters have upped their prices in some cases in order to compete with the feed side.

Looking ahead to the spring of 2013, barley will need to compete with every other crop in Western Canada, but Otto said an increase in acres was likely.

Malt companies were already putting out attractive signals to bring in production, he said, while strength in the cattle sector should keep feed demand solid as well.

Barley is also a good rotational crop and produces good net returns given its cheaper costs of production, he added.

– Phil Franz-Warkentin writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.