Beyond Malt: Fundamentals of Marketing Barley for Feed

Estimated reading time: 7 minutes

With malt acceptance uncertain and corn reshaping feed markets, farmers must understand the forces driving feed barley prices to capture the best returns.

By Delaney Seiferling, Freelance Writer

For many Saskatchewan farmers, barley has traditionally been a malt story.

However, in recent years, more and more may find themselves looking seriously at the feed market instead.

This is because the economics for marketing barley are changing, largely due to strong feed demand, tighter margins in livestock sectors and a narrower spread between malt and feed prices.

At the same time, weather and quality risks continue to make malt acceptance far from guaranteed. Malt barley may also need to be stored on farm for months; whereas feed barley can be sold in a more timely fashion, generating cash flow.

But while the feed market can offer competitive returns, quicker turnover and sometimes more price certainty than malt, it also operates differently than the malt market, with prices strongly influenced by factors beyond the farm.

This is why it’s important for farmers looking to market feed barley this year to understand a few fundamentals about how the market operates, in order to capture the best prices possible and make the best choices for their operations.

Here are a few lessons from feed market experts.

Price Discovery is Local — and Limited

There is no futures market for barley anymore, making price discovery more difficult, says Jay Crandall, Strategic Commodity Specialist with Monarch Ag Merchants, based in Strathmore, AB.

Since the Winnipeg feed barley futures market was discontinued in 2007, there has been no strong price discovery system for feed barley, leaving farmers to rely on fragmented information from brokers, local elevators and regional markets.

Further complicating things, export demand — particularly from China – is playing a larger role in recent years, says Crandall, who has spent 45 years working in the sector and will retire this spring.

Given all this, he says the best prices sometimes come through local elevators rather than traditional benchmarks like the Lethbridge market, making it essential for farmers to actively monitor local price signals.

“Without a really strong price discovery ability, you’re really down to just what the local elevator is paying, what the Lethbridge market is paying, and comparing the two,” he says.

In light of this, he advises farmers to gather their own data regularly.

“Even if it’s once a month, get a price, because you can always reference back to it,” he says.

U.S. Corn is the Biggest Competitor

Feed barley pricing is heavily influenced by the cost and availability of imported corn, says Crandall.

Since the 2021 drought, corn has become a much bigger competitor in Western Canadian feed markets, especially in southern Alberta, where year-round supply, strong price transparency and the ability to purchase large volumes without moving the market have made it attractive to feedlots.

“Any time of the day, you can figure out the price of corn. You can’t do that very easily with barley,” he says. “You cannot buy 5,000 tons of barley without causing the market to go higher.”

Furthermore, when Western Canada relies on imported U.S. corn, the value of the Canadian dollar directly affects landed feed costs, says Brian Perillat, an Agricultural Economist and Agribusiness Specialist with More Than Just Feed, based in Strathmore, AB.

“If we’re importing corn, as our dollar goes up, it drops the price of the landed corn price,” he says.

When corn prices are similar to, or only slightly higher than barley, many buyers shift to corn, putting pressure on feed barley demand and forcing farmers to weigh whether barley makes sense in the rotation or now, Crandall says.

“From a grain grower’s point of view, it becomes the economics — does growing barley make sense or not?”

Freight and Location Matter

Freight costs and farm location play a major role in the feed barley price a farmer actually receives, because local bids are typically based on the Lethbridge market and then adjusted for transportation, says Crandall.

“If Lethbridge is the price point because it’s the largest user… all other prices are going to arbitrage.”

“Where your farm is located to market, that’s what’s going to matter. Whether you’re farming in Regina and your freight’s $50 a tonne… or you’re farming in Olds and your freight is maybe 50 cents a bushel [ed. $23/tonne], you’re going to see those arbitrages geographically.”

In most cases, prices across regions “arbitrage” back to that key demand centre, he says, but unusual demand patterns, such as aggressive export buying in certain areas, can disrupt normal relationships.

“This year we’ve seen the price of the elevator going to export being better … and it’s not even explainably better,” he says.

In light of all this, it’s critical for farmers to understand their freight disadvantage (or advantage), watch local elevator bids closely (especially when export demand in strong) and recognize that the strongest price may come from unexpected markets in a given year, Crandall says.

Marketing Discipline Matters – and Information is Everything

In a market with limited transparency, consistent information gathering and disciplined marketing matter as much as the price itself, in Crandall’s opinion.

He advises farmers to actively gather their own market information, compare multiple buyers and market consistently rather than waiting until they’re forced to move grain.

 “You need to be diligent. You need to check your selling options: ‘Where can I sell it? Who can I sell it to? And what is their price?’”

Gathering this type of information will help identify opportunities, avoid poor timing and make more informed decisions about risk, storage and market options, he says.

Know Your Grain and Your Storage Economics

Quality, risk and carry decisions directly affect value.

For these reasons, both Crandall and Perillat stress that strong barley marketing starts with knowing your product and your costs.

“Canadian Tire knows exactly what’s on their shelf for sale,” Crandall says. “The farmer needs to know exactly what’s in his bin for sale.”

Beyond knowing the exact quality and condition of the grain in their bins, Crandall and Perillat advise farmers to also build market contacts to uncover pricing opportunities and calculate their storage, or “cost of carry,” so they know whether holding grain for a later price actually improves returns.

“Establish for your own farm what is the cost of carry,” Crandall says. “’Am I really gaining any extra money by waiting… or am I ahead or behind?’

Without clear knowledge of grain quality and the true cost of storing it, farmers risk making marketing decisions that feel strategic but actually erode their margins.

Conclusion

The feed barley market may hold many opportunities for today’s barley farmers, but it is almost one of limited transparency and shifting demand.

As such, feed barley returns depend as much on management as on the price itself.

Given this, the onus is on farmers to do their due diligence, says Crandall.

The good news is, Saskatchewan farmers already have an advantage in this area. Throughout his career, he says he has observed how Saskatchewan farmers tend to market consistently and strategically.

“Over my time in this industry, I will say this: the Saskatchewan farmer has probably been the best marketer … I always felt the Saskatchewan barley farmer was a much more consistent marketer of his crop.”

And as long as farmers continue to pay attention, do their due diligence and have a basic understanding of how the markets work, they will be positioned to capture opportunities, he says.

“Not that you’re going to predict a market’s direction in advance [but] you’re going to have a little better understanding where it’s going to go.”

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