Canada nudged higher its forecasts for barley and oat prices, citing strong international values of the grains, fuelled by decent demand from importers.
AAFC, the Canadian farm ministry, nudged higher by Can$5 to Can$225-255 a tonne its forecast for Chicago oat futures prices, on a spot contract basis, in 2017-18 - potentially leaving them on target for their strongest performance in four years.
Consumers in the US, the world’s biggest oats import market, “appear to be covered off for now” for their supplies, the ministry said, noting a “very good” pace of US imports of oats and oat products.
“Oat products are moving to the US at a record pace.”
However, futures, already trading at $2.56 a bushel for the spot December lot, are entering a period when prices often find support.
“Based on longer-term seasonality, prices and activity generally become more firm by the end of November as users secure supplies before the Christmas slowdown,” AAFC said.
‘Additional price gains’
For feed barley, the ministry said that seasonal price patterns suggested that world values should “remain steady until 2018, before posting some additional gains”.
This when global prices are already 20% higher than a year ago, “due mainly to smaller barley crops in Australia and the European Union,” the top two exporters of the grain, with a world market share of more than 45% between them on US Department of Agriculture estimates.
In another sign of market strength, “the premium spread [of barley values] to world corn prices is at a three-year high”.
In Canada itself, AAFC said that while barley prices have retreated from 2017-18 highs reached in late September, the decline “was minor and prices remained strong”, reflecting factors including a drop of 16.6% to 7.31m tonnes in domestic output.
Values have also found support in smaller stocks of forage after an unusually dry summer, “and the recent upturn in US hog and cattle futures markets”, with greater profitability for livestock producers seen as boosting demand for feed grains.
AAFC raised by Can$10 to Can$205-235 a tonne its forecast for Canadian barley prices in 2017-18, as measured in the Lethbridge cash market, which at the top end of the range would represent a five-year high.