Canada barley improvement threatens malt premium

Malting barley premiums in Canada look like following those in France lower, RMI Analytics said, citing disease as the main risk to improved crop condition, which was confirmed by farm officials.

Canadian barley crops have survived relatively unscathed from the rains which, in June 19-21, landed some of the highest precipitation on record on Western Alberta, the malting barley consultancy said.

"Dead spots," where crops have been overwhelmed by flooding, "will have some impact on yields but should not amount to more than 5-10% on the worst hit fields", RMI said.

Surviving crops in the third-ranked barley producing country were now benefiting from heat which "has now crept in across the prairies and is having a positive impact on vegetative growth", and is expected to remain in place for some days.

'Seem to be unsustainable'

The conditions pose some risk, in encouraging the spread of disease, RMI said, noting "early reports of increase disease pressures".

"This heat/moisture combination will have a negative impact on yields as disease pressures will take hold," the consultancy said.

However, the overall prospects would not appear to justify the malting barley price of $335 a tonne for export from Vancouver, a $90-a-tonne premium to feed barley.

"Not only is the Canadian origin again the most expensive malting barley but the spread of feed and malting has also further widened," RMI said.

"Both the current malting barley [export] value as well as the malting/feed barley spread seem to be unsustainable in the long run."

'Benefiting all crop types'

The comments follow a caution by RMI, echoed by trading house Evergrain, over French malting barley premiums a month ago, and which have fallen some E10 a tonne since to a level just?below the average of E35 a tonne, a decline hastened by promising early reports from the French harvest.

And they co-incided with crop updates from Canadian provincial farm officials which highlighted the strong condition of domestic crops.

In Manitoba, officials reported that "warm and dry weather conditions are welcomed by many producers", and are "benefiting all crop types.

"The favourable weather conditions are also allowing some acres impacted by excess moisture to recover," besides enabling pesticide applications.

In Saskatchewan, officials reported a two-point rise to 80% in the proportion of barley rated in "good" or "excellent condition as of Monday.

Spring wheat was rated 83% in good or excellent health, the same as a week before, and canola 73% good or excellent, down three points week on week.

Source: http://www.agrimoney.com/news/canada-barley-improvement-threatens-malt-premium--6021.html

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