Wednesday August 27, 2014

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Prairie cash barley bids ease as demand wanes

Cash bids for farmers delivering feed barley in Western Canada have begun to ease as demand begins to wane, according to industry participants.

Some of the decline in values is reflecting the fact that feedlot demand on the Prairies has begun to drop off, said Jerry Klassen, manager of GAP SA Grains and Produits in Winnipeg.

The easing of demand from the feedlots came in response to there being less cattle being put on feed, he said, and that these end-users have covered requirements until at least the middle of February.

Another factor in the weakening of cash bids is the fact that more and more cheaper alternatives are making their way into the feed system for livestock.

"Feed wheat has become an attractive alternative for a lot of the end-users as it costs a lot less," he said. "DDGs (dried distillers grains) also continue to make their way in the western Canadian feed system."

Farmers with mid-quality wheat are finding that the cash market is paying roughly the same or a bit better, and in turn have been taking advantage of those opportunities, a market analyst said.

Klassen noted there had been some export demand for feed barley, which had helped to keep a firm floor under those prices. However, that interest has also waned, allowing the cash bids for feed barley to weaken.

The drop in western barley feed values were seen as being temporary as demand from Saudi Arabia and other such nations was expected to pick up again once values again become attractive to these buyers, Klassen said.

Cash bids for barley in the Lethbridge, Alta. area were said to be trading in the $275 per tonne range, while in the Calgary area bids were trading in the $260-$265 per tonne region.

In early January, cash bids for barley in the Lethbridge area were trading in the $275-$280 per tonne range.

-- Dwayne Klassen writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.


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