Expensive corn to keep feed barley prices high

Some feed grain prices are falling due to increased supplies, but barley is holding up very well, analyst said.

“It’s hard to be too negative on barley when corn prices are as high as they are,” said Bruce Burnett, analyst at MarketsFarm.

The December corn futures contract was trading at US $ 5.39 a bushel as of October 20, and barley is earning a premium over the price of US corn delivered to Lethbridge.

“You are talking about a fairly expensive corn to replace very expensive barley,” he said.

Corn imported from the United States will maintain a cap on Canadian feed barley prices, but they will still remain at near record values, Burnett said.

This means that the energy component of the feed market will remain at high levels, but there has been some slowdown on the protein side of the equation.

“The protein food market is going to be heavy,” he said.

Mac Marshall, vice president of market intelligence at the US Soybean Export Council, said it had a lot to do with changing dynamics in the crushing industry.

“We crush more for oil than for flour,” he told a recent webinar hosted by USSEC.

“The natural implications of this are that we’re probably going to have a few more meals to sell. “

Marshall said soybean meal values ​​have fallen 20% since the start of the calendar year, while soybean oil prices have skyrocketed due to tight global vegetable oil stocks.

Randy Mittelstaedt, Head of Market Analysis at RJ O’Brien, agrees with this assessment.

“Over the next 12 months, we’re very likely going to be a bit heavy on the dining side in the United States,” he said.

This is happening at the same time as hog and hog inventories are dwindling in the United States, Mittelstaedt said.

The U.S. Department of Agriculture reports that there were 75.4 million pigs and pigs as of September 1, 2021, down four percentage points from a year ago.

Another factor to consider is the rebound in ethanol production in the United States, which translates into more distillers’ grains.

Jim Mintert, director of the Center for Commercial Agriculture at Purdue University, said the USDA projects 5.2 billion bushels of corn will be used in the ethanol sector in 2021-2022, up from 5.03 billion. of bushels. last year and 4.86 billion the year before.

He believes the number will be even higher than the USDA estimate based on recent ethanol margins of about US $ 0.66 per gallon.

“These are the strongest margins we’ve seen, certainly since the pandemic,” he said during a webinar hosted by the university.

The weekly ethanol production figures recently surpassed pre-pandemic levels after being well below those levels for most of 2021.

He believes many factories are running at full capacity again, which means less corn and more distillers’ grains available for the feed markets.

Burnett said another reason to stay bullish on corn and barley prices was very high fertilizer prices, which could deter some growers from planting corn in Brazil and Argentina this year and the United States. next year.

“It will change the economy for these (producers),” he said.

Barley will also be in an uphill battle for acres in Canada, where canola spot prices were $ 22 a bushel as of October 20. He doesn’t expect acres of barley to change much from last year’s levels.

This despite expectations of “extremely tight” barley stocks heading into the new crop year. There is simply too much competition from other crops like canola, durum wheat, and pulses.

About Marco C. Nichols

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