Alberta Barley

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May 1

Continued new crop concerns struggle to impact falling wheat prices; barley feed prices remain stable

Posted on May 1 By: Victoria Decker

As was previously reported, a quota was imposed on grain exports from Russia up until July 2020. It has been reported that this quota has already been reached, weeks earlier than the previous expectation of mid-May. In addition, USDA crop progress reports have continued to show spring wheat seeding progress lagging behind the average. In the report for the week ending April 26, 2020, average seeding progress is reported at 14% in comparison to the 5-year average of 29%. For the same period, the percent of the winter wheat crop rated good to excellent was 54%, a 3% decrease from the previous week and lower than the 64% reported at this time last year. 

Despite these concerns, the majority of global wheat futures markets continue to reflect weakening global demand through falling prices. At the time of writing, both Chicago and Minneapolis futures are continuing a downward trend while Kansas markets continue to trade within a steady range. Markets that would normally be focused on the upcoming crop appear to be currently still focused on demand changes brought about by COVID-19.

Feed barley prices continue to remain stable as of the time of writing, with pricing ranging between $4 to $5 per bushel depending on the location in Alberta. This is despite feed grains facing a scenario of higher supplies and lower demand. Maltsters continue to face lower demand for their products, and farmers planning on growing malt barley are encouraged to check with their buyers for their local contracting options. Lower demand for malt is expected to result in more feed barley supplies. As currently closed slaughter facilities are now projected to re-open in early May, the total number of cattle ready for slaughter will resume being drawn down, reducing the total number of cows needing to be fed.

Update from AAFC on International Supply Chains 

United States

The United States continues to face challenges in the processing industry as a number plants are facing closures and/or operating at reduced capacity due to COVID-19. Plant closures are causing production to back up.  This is having an effect on prices and the ability to find markets for their animals.

On April 28, 2020, President Trump signed an Executive Order (EO) declaring meat and poultry plants as critical infrastructure. He delegated authority to the Secretary of Agriculture under the Defense Production Act (DPA) to ensure the continued supply of meat and poultry. This will ensure that processors continue operations to the maximum extent possible and consistent with the guidance issued by the Center for Disease Control (CDC) and the Occupational Safety and Health Administration specific for meat and poultry workers. 

That said, CDC’s guidance for critical infrastructure workers advises that these workers may be permitted to continue to work following potential exposure to COVID-19 provided they remain asymptomatic and additional precautions are taken. The USDA will work with meat processing to affirm they will operate in accordance with this guidance, and then work with state and local officials to ensure that these plants are allowed to operate. 

European Union

Agri-food supply chains continue to function despite certain challenges when it comes to transportation and logistics. Over the past few weeks, European countries have begun to gradually ease measures put in place to stop the spread of COVID-19. However, restaurants and other businesses will be slow to re-open given ongoing risks.

Spain was the first of the hardest-hit EU countries to begin opening up on April 13. 

Italy announced that it will begin relaxing COVID-19 measures on May 4, with bars and restaurants reopening for takeaway service (currently just delivery). Bars and restaurants may be allowed to reopen for dine-in service starting early June (with social distancing measures in place), although no final decision has been made.

Resources:

For a further update on the wheat markets, read the most recent Market Insider article.

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