“Feed barley prices tend to make a low during the harvest period when there is the most abundant supply,” explains Blue. “Harvest progress, yield reports and buyer demand all affect timing of harvest price lows. After a harvest low, prices usually rebound as harvest-time selling subsides and as demand increases with the placement of cattle on feed.”
Winter weather becomes a factor for barley prices, with cold, stormy weather causing interruptions to barley deliveries and pushing prices higher. Cold weather increases feed consumption which increases demand and can increase price, at least in the short term. Meanwhile, export demand can arise, resulting in higher bid prices from exporters to acquire their export needs.
Another factor that has become important to barley prices is the cost of importing corn to Alberta to use as a feed substitute for barley. In the case of U.S. corn imports, the exchange rate also becomes a factor in that cost.
In late winter, barley prices tend to moderate as feeders have their feed needs booked and their cattle inventory may be reduced by sales. Prices then tend to improve into May-June as feed providers become busier with seeding activities while concerns of potential new crop supplies may arise.
Following a springtime price improvement during the seeding period, crop inventory sales tend to increase, particularly if new crop growing conditions are favourable. Unless crop production problems locally or internationally support prices, barley prices usually erode from mid-June into the harvest lows.
“Seasonal price patterns are one factor to consider when developing a marketing plan and analyzing a market. Harvest-time delivered price bids tend to be the highest at the beginning of the growing season when production uncertainty is greatest. That is often the best time to forward price some expected production, considering cash flow needs and available storage for the expected new crop.
“However, in a year of reduced crop production in a major Northern hemisphere area, prices can rise during the growing season right into harvest. Because of this possibility and that of an unexpected production shortfall on your farm, it is recommended to forward contract with buyers no more than about 35% of expected production prior to harvest.”
The bottom line, says Blue, is seasonal prices should be considered as more of a tendency than a certainty. However, of the many factors that can affect crop prices, the seasonal price pattern is a factor to keep in mind.
For more information, see:
Agricultural Marketing Guide
Source : Alberta.ca/agri-news