Corn prices have reached historic highs, and the outlook for 2021 looks very promising if you are looking to sell. However, if you’re on the buying side, such high feed prices across the market have not made it easy to purchase.
When it comes to barley, Brennan Turner of Combyne Ag Trading Network says you will probably see a higher carryout in 2021 than what Agriculture and Agri-Food Canada (AAFC) was originally forecasting. There has been a lack of commercial demand for malt barley, so as a result, it has gone into the feed markets. As Turner notes, with the prices we are seeing on feed barley, he doesn’t see the point in trying to hold out for your great germ and chit when it can be put into the feed market at an even higher price. However, this won’t hold out forever.
“This is obviously location specific, but I think that barley is going to have to come down. If you compare to a chart perspective from two years ago — when we saw these feed barley prices — basically from January 2019 through to about August 2019, we saw prices drop about 80 dollars mmt. So from a forward contracting standpoint, there’s definitely some opportunities there. ”
The feed market has been so high, that even some specialty purpose spring wheat has made it into the market, as feed yards are looking for lower cost options. From an outlook perspective, Turner says this is directly related to what is going on in the corn market.
“When you combine that with Kansas City and Chicago winter wheat prices being where they are at, because of some of the drought concerns in the U.S. southern plains and a couple other spots, it’s hard to ignore almost $7 cap per bushel cash price for some of this low protein wheat that’s out there. Specifically in Alberta. You obviously back off a little more as the demand and supply area you are talking about changes. But I think we’re going to see a lot more of that high protein HRSW average move over into this low protein market. Because not only is it paying higher from an ROI perspective, but more often than not, you actually see better yield from some of these low protein varieties.”
He notes that when you are dealing with some of these soft, GP, or CPS varieties of wheats, the grading isn’t as intense, which is also an attractive piece for growers to take a look at for the feed or ethanol markets, and maybe not focus so much on the milling and export markets.
Check out the full conversation between Turner, and Kara Oosterhuis, below:
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