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Feed barley price outlook

Market Talk with Jerry Klassen

Feed barley price outlook

Feed grain prices reached historical highs in mid-May. It appears that barley supplies will drop to bin-bottom levels at the end of the 2020-21 crop year. The market has been functioning to ration demand through higher prices; however, domestic usage has been relatively unchanged from past years. At the same time, Canadian barley exports have been running sharply above year-ago levels.

I’ve received many inquiries from feedlot operators regarding the price outlook for barley and the overall feed grain complex. Many cow-calf producers are also wondering if barley prices will remain at the higher levels through the fall period. Higher prices have encouraged farmers to increase barley acres this spring but we haven’t seen any reprieve in new-crop prices. Therefore, I thought this would be an appropriate time to review the Canadian barley fundamentals. I’ll also provide a brief overview of influences driving the overall feed grain complex.

Canadian barley stocks at the end of the 2020-21 crop year will be historically tight. Statistics Canada reported that domestic barley feed usage from August 1 through March 31 was 5.9 million tonnes, up from year-ago consumption of 5.4 million tonnes. Crop year-to-date exports for the week ending May 2 were 3.3 million tonnes, up from the year-ago export pace of 1.6 million tonnes. Despite the COVID pandemic, domestic malt processing is running similar to year-ago levels. Given the year-over-year increase in demand, I’m projecting July 31, 2021 barley stocks to come in near 570,000 tonnes, which is down from the five-year average of 1.3 million tonnes. As a rule of thumb, if the ending stocks are sharply below the five-year average, then barley prices will be significantly above the five-year average.

Canadian farmers intend to plant 8.6 million acres of barley this spring according to Statistics Canada. Using a traditional abandonment rate and a five-year average yield, production has the potential to finish near 12.0 million tonnes, up from the 2020 output of 10.7 million tonnes. At the time of writing this article, a large portion of Alberta and Saskatchewan had received less than 40 per cent of normal precipitation over the past 60 days. Farmer selling of old- and new-crop barley has come to a standstill because of the uncertainty in production. The markets usually incorporate a “production risk premium” until the upcoming crop is more certain. Once producers are comfortable with their yields, they’ll sell whatever they have left on-farm. This is a widespread herd mentality for all crops.

Canadian barley exports for 2021-22 are projected to reach 3.6 million tonnes due to ongoing demand from China. Lower Canadian wheat production will keep domestic feed barley usage at the higher levels. Therefore, the 2021-22 ending stocks will once again come in under one million tonnes. As long as Canadian barley ending stocks are under one million tonnes, barley prices will remain sharply above the five-year average price in Western Canada.

Outside influences have also contributed to higher world coarse grain prices. China has been the main buyer of U.S. corn and Canadian barley over the past year. There is no signal buying will let up in the upcoming crop year. It takes more than one year to replenish stocks. Second, China will maintain the 80 per cent import tariff on Australian barley. China has booked significant volume of new-crop Canadian barley and so there is no signal this demand is easing.

World corn production is coming in lower than earlier anticipated. In Brazil, the second-crop corn — known as the Safrinha production — is experiencing drought-like conditions. Strong domestic Brazilian corn prices are limiting the supplies available for export. U.S. corn ending stocks for the 2020-21 crop year will also drop to historically low levels.

U.S. farmers intend to seed 91.1 million acres of corn this year, up marginally from the 2020 seeded area of 90.8 million acres. This is not sufficient to build ending stocks. The market cannot afford a crop problem in any major producing area. Otherwise, we could see further upside in the corn and barley markets.

In conclusion, the barley market may soften during the harvest period but the weakness will be short-lived. Barley and corn prices will remain above the five-year average given the tighter world coarse grain supplies. This is going to limit the upside in the feeder cattle market. Feedlots should try to book the bulk of their feed grain requirements during the fall period for the 2021-22 crop year.

About the author


Jerry Klassen is president and founder of Resilient Capital, specializing in proprietary commodity futures trading and market analysis. Jerry consults with feedlots on risk management and writes a weekly cattle market commentary. He can be reached at 204-504-8339 or via his website at

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