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Malting barley prices - The real story
David Anderson, Parliamentary Secretary to the Minister for the Canadian Wheat Board, claimed Feb. 14 in the House of Commons that western Canadian producers are receiving $1 per bushel less for malting barley than U.S. producers. The Feb. 2 issue of Barley Country, published by the Alberta Barley Commission, makes similar price comparisons.
In fact, this is not the case. About 75 per cent of the malting barley in the U.S. is contracted before seeding. This means that the vast majority of American malting barley producers are not benefiting from current higher prices for malting barley.
As well, Mr. Anderson’s price comparison relates a spot price to a pool value. This is not a valid comparison. A pool value is an average of prices achieved over an entire crop year, while a spot price is a price on a particular day. In a rising market, a spot price is by definition higher than a pooled price.
The relevant question is whether the CWB is capturing the current higher spot prices for malting barley. The answer is yes. Recent higher-priced malting barley sales will be reflected in the 2007-08 pool. In its first Pool Return Outlook for 2007-08, the CWB predicts returns to farmers of $35 per tonne higher than the current malting barley PRO for 2006-07.
A U.S. comparison: three-quarters of U.S. malting barley is contracted in the spring. The yellow line indicates the price at which most two-row malting barley was contracted in Montana.