Canada's harvest is providing mixed news for the world barley market, producing a crop high in quality – so filling some of the void in malting barley supplies – but low in quantity, tightening the market for feed grain.

Canada will, thanks to a "quality barley crop", prove able to fill some of the demand for malting "deflected" from Europe, where damage caused by late harvest rains in countries such as Germany has led to disappointing grades, the Canadian Wheat Board said.

"Good harvest weather throughout September has helped ensure the quality of this year's malting barley crop in Canada, a welcome relief after last year's cold, wet harvest conditions," the board, the world's top seller of wheat and barley, said.

The comments come amid some weakening in the strong European premiums for malting barley, which the UK's Home Grown Cereals Authority highlighted on Monday were close to a record high.

Since then, malting barley prices at the French port of Creil have fallen from E260 a tonne to E240-245 a tonne, while feed barley on the French cash market has eased only E2 to E193 a tonne, according to consultancy Agritel.

Weak harvest

Indeed, Canada's barley harvest, by volume, "still looks to be well below Canada's five-year average", which on US Department of Agriculture data is 9.9m tonnes.

The USDA has estimated Canada's barley production this year at 8.28m tonnes, with Canada's farm ministry pegging it at 8.27m tonnes.

Feed barley prices are "forecast to remain high in Western Canada due to production volumes and expectations for reduced availability of feed wheat supplies, given the high-quality wheat crop", the board added.

Prices of the grain are also being supported by a "tight" spread between barley offers from the Black Sea, a fierce price competitor in crop markets, and those made by other exporters "helping support the overall price structure".

Ukraine, typically the top barley exporter, has imposed a controversial tax on grain exports.

Barley vs corn

The CWB also flagged the knock-on effect from high corn prices, which have encouraged barley in feed mixes.

"Even with corn futures decreasing throughout September, feed barley remains a cheaper alternative in many regions.

"Even in the US, where corn is king, feeders will be looking to substitute grains when corn becomes too pricey or difficult to source.

"Barley feeding is expected to remain very strong in Europe and the Black Sea region where cattle, hog and poultry production is more flexible in terms of feed substitution."

In Australia, feed barley futures on Friday closed higher, up Aus$4.00 at Aus$221.00 a tonne, despite tumbles in Chicago prices overnight.