If you’ve been watching the feed market, it’s been quite fascinating to say the least. Despite reaching record levels of production of barley in 2020, we are seeing feed barley as high as $6 in Southern Alberta.
The numbers we are seeing are in the range of 50 cents higher than malt prices, and feed wheat priced 25 to 30 cents higher than grade one spring wheat. This creates a very unique situation, as producers don’t necessarily have the incentive to go and sell wheat to an elevator, when they can put it into the feed market for a higher price, and less grading issues.
This has many buyers and sellers asking the same question: why is the feed market so high, if we’ve got so much production out there?
Brian Voth, CEO of IntelliFarm, joined Dec 4th’s RealAg LIVE! segment to answer this question. Voth says there are a couple factors that are at play when it comes to the feed market.
Less feed grade grains this year
There’s a lot less feed grade grains out there this year versus the last couple of years, where the harvest has been challenging — to say the least.
“We’ve had a lot of feed grade grains because of poor weather through harvest. We’re not in that situation this year. So a lot more product — and that goes to oats, wheat, barley — is grading number one, and number two. It’s perfectly good from an export standpoint. It’s not necessarily being just dumped into the feed market, like we saw in the last couple of years,” says Voth.
Big export programs on barley
Canada has been supplying more barley to China and other export markets, given the state of trade relationships around the world.
“That has room to improve even more, given the trade issues going on between Australia and China right now. Typically, Australia would ship a lot of barley into China, and with them going to the WTO about anti-dumping, and essentially banning purchases out of Australia, it does leave the door open to Canada supplying even more barley into China instead,” explains Voth. “With this big crop, it just builds on the fact that we can build a bigger export program because we have the volume to do it.”
Another factor that feeds into the high feed prices is what’s going on with corn in the United States.
“When you look in the U.S., the corn yields have come down over the course of the summer, with not ideal weather. There’s less corn available, especially in the northern U.S., so there’s less corn coming into Canada,” Voth notes. “Typically you’d bring in a lot of corn for hogs in Manitoba, and for the cattle side in Alberta. So we’ve seen a big increase in corn prices in the U.S. with this rally, and less corn moving in. So there’s just more demand on the feed aspect as well.”