Corn an Anchor on Barley Prices

Aug 20, 2021

Western Canadian barley production may fall sharply due to drought but corn will not let prices runaway to the upside.

“New-crop corn, November forward, is trading at a C$50/tonne discount to the current bought barley price. It seems unlikely we’ll have any substantial rally in barley prices unless corn moves any higher,” said Allen Pirness, trader for Market Place Commodities in Lethbridge.

Feed barley in Alberta is now trading at about C$9.25/bu ($425/tonne) and feed wheat at around $11.55 (also near $425/tonne).

The 2021 Prairie harvest is well underway, but drought and heat meanyields and production will fall well below earlier expectations. Regardless, Pirness said he does not expect barley prices to go up much more in the coming weeks. Current estimates suggest a 2021 Canadian barley crop of around 7 million tonnes, well down from the latest Agriculture Canada projection of nearly 11 million. The US corn crop is not in ideal shape – areas in the western and northwestern have suffered due to dryness – but the crop is still projected at 375 million tonnes, the second largest on record.

“A lot of feedlots are bridging the gap now between their current feed (and new crop). They have corn booked until November. They’re just getting through the next two months of feeding in September and October and then there will be a large-scale switch to corn,” Pirness said.

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