New Crop Expected to Set Direction of Feedgrain Prices

CANADA - The Saskatchewan Pork Development Board predicts the new crop will be the factor that determines the direction feedgrains will head during the coming year, writes Bruce Cochrane.
calendar icon 18 May 2007
clock icon 3 minute read

Over the past year prices for wheat, barley and corn have increased dramatically fueled by a strong demand, primarily in the U.S., for corn for the ethanol industry.

Sask Pork policy analyst Mark Ferguson notes feed wheat and feed barley prices have very strong linkages with corn prices due to the substitutability of these commodities so when you see a large increase in the corn price in the U.S. you'll see an accompanying increase in feed barley and to a lesser extent feed wheat.

Mark Ferguson-Saskatchewan Pork Development Board

Ethanol demand is forecast to increase again next year and for the foreseeable future so that's just a fact.

However, in response to the high prices of corn and wheat and barley this past year, planting intentions across the board are increasing.

When you have commodities like corn and wheat and barley, whenever the price increases, people are going to respond and produce more.

According to Ag Canada the barley production is forecast to increase by 20 percent due to higher seeded area and yields and corn production in Canada is forecast to increase by 24 percent this year for the same reason so producers of these commodities are increasing their production in response to price and the same thing's happening in the U.S.

Ferguson says in the short term, over the next few months, prices are unlikely to decrease by much and he predicts it'll be the new crop that will establish prices for the coming year.

He says it's pretty tough to predict very far out what these commodities will do but he suggests, once September rolls around, we'll know how accurate the predictions on carry-out estimates are and we'll see where the prices are going to go.

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