Examining the Barley Market

Rejeana Gvillo

Sep 21, 2020

Canada is poised to harvest a large barley crop and so is the world. USDA raised its global production forecast by over 4 million tonnes in its latest report to a record 157 million tonnes.

Statistics Canada sees the Canadian crop at 10.6 million tonnes, which is up only marginally, year over year, but large overall. A couple of years ago, global barley supplies were tight. Now we are facing a situation where barley supplies are ample. 

Some general facts about barley

The EU is the largest producer in the world followed by Russia. This year, USDA sees the EU harvesting 63.3 million tonnes and Russia cutting 20.3 million tonnes.

The EU is also the largest consumer followed by Russia. Those two countries are the largest exporters with Ukraine’s exports sometimes topping Russia’s program.

Saudi Arabia is the largest importer followed by China. Ukraine and Russia hold the market share for Saudi Arabia’s imports while Australia, Canada and France are the key suppliers for China’s imports.

Where can Canada benefit?

While Canada has exported to Saudi Arabia before, we do not expect to see a surge in exports to that importer. Russia’s crop is large and its export volumes to Saudi Arabia likely will increase.

Canada could benefit in the Chinese market but it is not clear cut. While Russia has not historically exported much barley to China, China now allows Russian barley into its borders (the allowance was issued this calendar year).

With Russia harvesting a sizable crop, we could see Russian barley heading to China and making up from the loss in Australia’s exports. Canada also would be competing with Ukraine and France on market share in China with Russia simply an added risk.

Well over half of Canada’s barley exports already head to China — prior to the Australian tariff implementation.

Overall, we do think there is opportunity for Canada to boost its export prospects to China, but we are not overly optimistic that this year will be a massive export year given the competition expected from Russia, Ukraine and the EU. 

What’s happening locally?

Harvest is moving along. Manitoba’s barley harvest is wrapping up with 92 percent collected by Sept. 15. Saskatchewan reported that 72 percent of its crop was cut as of Sept. 14, while Alberta had 47 percent of the barley crop in the bin as of Sept. 15.

Barley bids across the Prairies have actually risen during September despite harvest pressure, which could be partly tied to higher corn, soybean and canola futures/prices. While barley prices may be supported temporarily by rising prices in other feed items, the balance sheet overall is not price friendly.

But Market Advisory subscribers are encouraged to reach out to local FMAs to achieve the best price possible.

For instance, we checked our database midweek and found price discrepancies of $1.00 per bushel within a 80-kilometer radius for barley spot delivery. The example shown below is basis bids offered within a 80-kilometer radius of Richardson Pioneer located in Camrose.      

FBN's take on what this means for the farmer

Ample global barley supplies will make it difficult for Canada to have a much larger barley export program.

Right now, we see barley exports about doubling, year over year. But even then, we still are facing an ample supply situation which is expected to weigh on prices eventually.

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Rejeana Gvillo

Sep 21, 2020