During the first week of January, Lethbridge area feedlots were buying feed barley in the range of $310-$320/tonne delivered. In central Alberta, operations were making purchases from $270/tonne to $310/tonne.
The feed barley market came under pressure in December after the release of Statistics Canada’s November crop survey. Weaker corn prices have also contributed to the softer market for feed barley. Imported U.S. corn was trading in the range of $315-$325/tonne delivered in southern Alberta in early January. Western Canadian imports of U.S. corn are set to increase over year-ago levels. The market is bearish in the short term. However, the feed grain complex is poised to experience a significant rally later in spring and summer. In this article, I’ll provide a general market outlook for the feed grains complex.
According to Statistics Canada, Canadian farmers harvested 8.8 million tonnes of barley this fall. This was up from previous estimates of eight million tonnes and down from the 2022 output of 10 million tonnes. Farmer selling tends to increase during January and February and then tapers off in March and April. During the summer of 2023, imported U.S. corn delivered to Lethbridge was significantly lower than barley. Therefore, many feedlots booked U.S. corn on long-term contracts. Western Canadian imports of U.S. corn for the 2023-24 crop year are expected to reach 3.5 million tonnes, up from the 2022-23 campaign of 2.1 million tonnes. U.S. corn production for 2023 came in at 387 million tonnes, up from the 2022 crop size of 349 million tonnes, and up from the five-year average of 345 million tonnes.
Read Also
As Canadian farmers plant less barley in 2025, what does it mean for cattle feeders?
Market analyst Jerry Klassen explains what fewer barley acres means for Canadian cattle feeders in 2025-26, and other factors playing into the feed grain market.
The barley crop was larger than expected. Corn production was up sharply. The feed grain markets in Canada and the U.S. have been functioning to encourage demand through lower prices.
The downside in the barley market is limited. Currently, we’re seeing Canadian feed barley offers competitive with French, German and even Australian barley in certain destinations. Barley in eastern Saskatchewan and non-major feeding regions of Alberta will move offshore rather than into domestic feed channels. U.S. corn out of the Gulf is discounted to corn of Brazilian origin. Export sales for U.S. corn are running 35 per cent ahead of last year. The barley and corn markets are encouraging demand at the current price levels.
Lower prices discourage production the following year. My straw poll survey across Western Canada suggests that Canadian farmers will be seeding 6.5 million acres this spring. This is down 11.2 per cent, or 821,000 acres, from the 2023 planted area of 7.3 million acres. South of the border, the USDA’s baseline projection had corn area at 91 million acres, down 41 per cent, or 3.9 million acres, from the 2023 seeded number of 94.9 million. It’s important to realize that the grain trade in the U.S. believes corn acres will be under 90 million so the USDA is on the high side.
We’ve never lost a crop in January but it’s no secret that the trend in weather is a concern. At this stage, North America will experience below-normal precipitation and above-average temperatures during the growing season. Below-average yields are expected for Canadian barley and U.S. corn. During the 2024-25 crop year, the corn and barley markets will function to ration demand through higher prices.
We want to draw attention to the situation in Brazil, which is experiencing adverse weather. Brazil has two corn crops. The main exportable surplus comes from the second crop known as the “safrinha production.” This crop is only seeded in February after the soybean harvest and harvested in June or July. Brazilian corn production estimates are all over the map ranging from 105 million tonnes to 129 million tonnes. This is down from last year’s crop of 137 million tonnes. Brazil will not be a major exporter until July 2024 and the exportable surplus will be down sharply. The trade is expecting a year-over-year increase in Argentinean production, but the exportable surplus is uncertain.
The barley and corn markets will be extremely sensitive to weather during the spring and summer. There is potential for a major rally in the corn and barley markets this spring. Lower barley production in Canada and a year-over-year decline in Brazilian and U.S. corn output will result in higher prices in the 2024-25 crop year. Feedlot operators need to secure feed grain requirements for the 2024-25 crop year. Cow-calf producers need to prepare for a Western Canadian drought. Hay and straw prices could be significantly higher next year. This will temper the upside in the feeder cattle market and squeeze feeding margins.
