GrainsWest Spring 2021

Spring 2021 Grains West 14 LIKE THE ALE VERSUS LAGER TASTE debate, the decision to grow malt or feed barley has strong proponents on both sides. As barley farmers ponder their crop options for the coming year, the choice has been complicated by an unusual de- velopment: “intent to grow” contracts for malting barley priced below that of feed barley. This erosion of the price premium for malting barley may have implications for maltsters and farmers. “Malt barley is one commodity that has really been hurt by COVID-19,” said Kevin Sich, Rahr Malting supply chain director at the company’s Alix malthouse. “Demand for wheat and canola is going through the roof as countries strive for food security, but with no fans in the stands for sporting events and concerts, draft sales are down 25 to 30 per cent in North America.” With the business slowdown for brewers, maltsters have had to be more selective in their barley buying and pricing. CRUNCH TIME “Normally with pricing, we look at the rates for competing crops (wheat and durum) and for feed barley,” said Sich. “To start, we figure out the return on invest- ment per acre and plug in some numbers. If wheat is trading at $7/bu and yields 60 bu/acre versus 70 bu/acre for barley, what price do we need for malt to be competi- tive? There are a lot of variables at play in setting the final prices.” For the 2020/21 crop year, Rahr did a lot of forward pricing for malt at $5.25 to $5.50/bu, in early 2020 while, in the latter part of 2020, feed barley came in at $6/ bu or higher. In January, 2021, feed barley prices closed in on the $7 mark. “We are Market shift causesunrest Could a drop inmalting barley prices spark a feed frenzy? THE FARMGATE Malting barley demand has been affected by a decline in draft beer sales during the COVID-19 pandemic. As a result, brewers and maltsters have been increasingly selec- tive in buying and pricing. Pictured here is the Canada Malting elevator faciltiy at Lyalta. Photo:CourtesyofMichael Interisano