Barley prices gaining ground as supply remains tight
Farmer-to-farmer trade is dominating movement in a tight and rising feed barley market.
Feed barley prices gained more than £2/t in the week to Wednesday (28 March), averaging £138.80/t ex-farm.
This further narrowed the gap between wheat and barley, with feed wheat moving up just 70p/t to average £144/t ex-farm.
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Barley has gained about £14/t over the past eight weeks, compared with an £8.50/t rise in wheat values. Continental European barley values have also risen.
Prices fell last week on a stronger pound, along with rain in parts of a very dry US. The pound’s strength came from the EU-UK transition agreement reached on 19 March.
The UK market continues to see a very wide range of prices, with spot barley anywhere between £130/t and £145/t, with the strongest prices in the south-west and north-west regions.
Grain market factors
- Tight barley supplies are narrowing the price gap with wheat
- Recent cold snap is thought to have had limited impact on European crops – but heavy rain is likely to delay spring plantings
- Despite rain last week, the US plains are still very dry
- International Grains Council forecasts total world grain stocks on 2018-19 season down 8% to 560m tonnes, with maize stocks falling by the greatest degree because of higher use
- Next market movement likely on US Department of Agriculture planting intentions report on Thursday (29 March).
Feed wheat midweek ranged from £134/t to £153/t ex-farm, with the strongest prices as usual in the North-East.
Tyneside based GrainCo was loading a 26,500t barley boat this week bound for Algeria, following a deal done three months ago. Even if more barley was available now, UK grain was too expensive for the export market, said managing director Gary Bright. Looking to new crop grain, he said that farmers had been reluctant sellers so far.
“Crops look like they have potential but many look indifferent at this stage,” he said.
Along with the drop recently reported in the Scottish area, he expected the area in the north of England would fall too.
Gleadell’s managing director David Sheppard said that the winter barley acreage was down about 10% and a lot of spring barley was not yet planted. The later it was sown, the greater the yield risk.
“There is a strong forward market and it looks tight,” he said.
New crop prices are in a wide range, with feed wheat at £130-£140/t ex-farm for harvest and barley at £120-£125/t ex-farm.
November prices are about £5/t higher than harvest values.
Provided the North’s two bioethanol plants stay open, wheat prices are expected to remain firm and the tight barley market could see the gap remaining narrow.
Cereal use for compound feed manufacture has been higher so far this season than last and barley has taken a higher share.
July 2017-January 2018 saw a 4.6% increase in wheat and barley use, to 8.14m tonnes, with wheat rising 2.2% and barley 26.9%.