CNS Canada — Lethbridge feed wheat and barley prices have dropped after a muted spring rally — and they’re likely to stay low throughout the summer, market participants say.
“They have a weak tone to them. I think a lot of it is lacklustre demand domestically,” said Allen Pirness, trader at Market Place Commodities in Lethbridge.
A large stretch of Western Canada has seen average to above-average precipitation, mid-June data from Agriculture and Agri-Food Canada show.
That rain allows ranchers to keep cattle out on grass, which cuts into demand for feed wheat and barley.
Cattle feeders have been hand-to-mouth buying this year, due to weak feeding margins, Pirness said.
“They’re not in a position where they’re putting on big tonnage. They’re just not building inventory,” he added.
Feed barley in Lethbridge is around $200-$202 per tonne, while feed wheat is slightly higher at around $205.
Canada’s winter wheat crop is expected to come early this year, Pirness said, which will add to an already supplied market.
Barley supplies are also high, said Brandon Motz, trade manager at CorNine Commodities at Lacombe, Alta.
Motz expects a short-lived demand boost during the summer, as farmers have held off on selling due to unappealing pricing, but overall he expects the market to remain flat.
If prices see a slight uptick, farmers will capitalize on the opportunity and sell heavily, which will push prices back down, Motz said.
“They want to ensure their bins are empty for fall. But I don’t anticipate moving and shaking in the summer into the new-crop season.”
Pirness doesn’t expect prices to move higher in coming months unless dryness concerns in the U.S. Midwest materialize.
Dryness in the U.S. Midwest would drive up prices in that market, which would spill into Canadian feed grains, he said.
“The heat pattern and everything that’s developing in the Midwest seems to have the market maybe looking to go higher,” Pirness said.
That region has seen scattered showers, which are beneficial for crops, though some forecasters say La Nina could cause a drier-than-average summer.
“But so far everything seems more bearish than bullish,” Pirness said.
— Jade Markus writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting. Follow her at @jade_markus on Twitter.