May 2021 eNewsletter
Outlook crowded by Lack of Transparency
There’s always plenty of uncertainty in grain markets; that’s a given. Of course, the biggest unknown comes from the weather, even with meticulous forecasting models. That’s why asking someone to predict prices six months, a year or two years down the road either ends up as lucky guesswork or failure. But that’s a story for another time.
Then there is the uncertainty that comes from government actions. At times, this can come from misses in official estimates from outfits like StatsCan or the USDA but those (in my opinion) are caused by error, not deliberate misinformation. Beyond that, another level of intentional haziness exists in certain markets, including barley.
When a single country dominates the export outlook for a crop, it adds a lot more risk. And for crops like barley (as well as canola, peas and flax), China is central to the demand side of the balance sheet. In 2020/21, Canadian barley exports will likely end up the highest in almost 30 years, and China accounts for 90% of that total.
Just to give an idea of what this year’s extra demand from China means to the barley balance sheet, the chart shows our latest forecast for 2020/21 ending stocks at about 400,000 tonnes, the lowest on record. This is based on our Chinese export estimate of 3.1 mln tonnes. If exports to China had instead stayed at the 2019/20 level of 1.43 mln tonnes (while Japan imported more), this year’s ending stocks would be over 1.6 mln tonnes, well above average. And prices would not have been able to hit the record levels seen this year.
If we look ahead to 2021/22, with a bigger Canadian crop expected, the market will depend even more on Chinese demand. Even if exports to China next year remain unchanged at record levels and everything else is roughly steady, 2021/22 ending stocks would rise to 1.4 mln tonnes. But if those exports would slip back to 2019/20 levels, ending stocks could top 2.5 mln tonnes, definitely burdensome.
With such huge variability in the outlook, almost entirely due to Chinese demand, it would be great if we could get an idea about the situation there. Unfortunately, that’s not the case. Official production estimates are either propaganda (for example, “the 17th consecutive bumper harvest”) or are designed to push prices lower by misleading. Its estimates of grain stocks are just as questionable. And more recently, reports have filtered out of China that the largest independent grain market analyst was shut down by police.
Rather than analyze the infrequent and inaccurate Chinese government announcements, we’re left with monitoring the actions, and those are encouraging. Chinese Customs data is generally reliable and has shown a bounceback in barley imports, with over a million tonnes per month each in March and April. Then, over the past six weeks, the CGC is showing over 700,000 tonnes of Canadian barley exports, most of it headed to China. And more recently, the USDA has been reporting multiple consecutive days of large 1.0-1.4 mln tonne corn sales to China for delivery in 2021/22.
Rather than paying attention to what China says, these actions indicate feed demand from the country is still exceptionally strong. And heavy new-crop bookings suggest that’s going to be the case into 2021/22. The demand may not be enough to use up all of the bigger 2021 Canadian barley crop, but the signals are pointing to another year of solid prices.
Spring Frost Risks in Cereal Crops
When emerged cereal crops experience night-time temperatures below 0°C, the question of crop survival is never far from a producer’s mind.
In general, wheat is relatively resilient to frost as compared to crops like canola. Wheat leaves can survive air temperatures down to -8°C to -10°C, however, leaves may see some leaf tip burn. This is indicated by recent research investigating ultra-early seeding of CWRS wheat (Collier et al., 2021).
Barley is less resilient and will exhibit frost damage at temperatures closer to -4°C to -6°C (R. McKenzie, personal communication). Minimal frost tolerance research on barley has been conducted. However, the chance of plant death is low at these temperatures, especially when soil temperatures are warmer. Warmer soil, and especially moist soil, is buffered from temperature changes which helps to protect the growing point of cereals from late spring frost. This is due to wheat and barley plants having their growing point under the soil surface until stem elongation (begins after the 3 leaf stage and tiller initiation) when the inflorescence, or developing head, begins to move above the tillering node. The growing point of the plant must be damaged for the plant to die. For this to happen, extended time periods below freezing would need to occur. If only the leaves are damaged, the plant can grow back from that protected growing point, but the crop will be delayed.
Plant Growth Regulator (PGR) Options for Barley
Now that both Manipulator and Moddus are registered for use on barley in Canada, growers have a couple choices for helping mitigate lodging risk in their crops.
However, you may still have questions about which products are effective for your farm and safe for marketing purposes. Always check with your grain buyer before applying these products, but here are some recent developments.
The plant growth regulator chlormequat chloride (Manipulator) has been updated to Yellow/Be Informed status under the Keep it Clean program, for use on all Barley in Canada (malt, feed and food). Malting barley had previously been classified as yellow.
This classification is a signal to growers to check with their grain buyers before using Manipulator on barley to ensure it will be accepted. Most malting companies and some grain companies have signaled they will not accept barley treated with Manipulator. Manipulator is classified as green/acceptable for wheat and oats.
Researchers on the Prairies have been working with chlormequat chloride (Manipulator) and trinexepac-ethyl (Moddus) to evaluate effectiveness on barley. Agronomists at Alberta Barley, Manitoba Crop Alliance and SaskBarley summarized the results and best practices.
We launched a podcast!
Earlier this month, we launched a new tool to help Saskatchewan barley farmers keep up to date with the latest information related to growing and marketing their barley crops.
The first season of the Barley Bin, a podcast featuring interviews with SaskBarley staff and a variety of barley research and production experts, is now available on the SaskBarley website.
Season one of the podcast focuses on information related to disease management, barley varieties, marketing opportunities and more.