Lower barley harvest forecasts in Russia and Canada support prices in Ukraine

Another decline in forecasts for barley production in Russia and Canada has increased global balance sheet tensions, but barley prices have not yet responded to this, as they remain under pressure from the corn market.

StatCan experts lowered their forecast for the barley harvest in Canada in 2021 by 27% compared to last season, from 10.74 to 7.8 million tons, since a 32.4% decrease in yield will not be able to compensate for the expansion of sowing areas by 8%. In the August USDA report, the forecast for the barley harvest in Canada was reduced by 2.5 million tons to 8.8 million tons.

In Russia, as of August 30, 15.9 million tons of barley with a yield of 2.46 t/ha were threshed from 6.5 million hectares or 81% of the area. A year ago, as of this date, 17.5 million tons of barley with a yield of 2.91 t/ha were harvested from 6 million hectares or 70.3% of the area. This confirms that the country's barley harvest will be lower than previously predicted by Russian analysts of 18.5 million tons and USDA experts of 19 million tons, which will lead to a reduction in exports. Last year, the barley harvest amounted to 21 million tons.

This year, the area of barley sowing in Russia has been reduced by 6%, in particular, under winter crops by 10% to 666 thousand hectares and under spring crops – by 5.5% to 7.4 million hectares. As of August 25, barley exports amounted to 0.9 million tons, which is 20% lower than last year's pace.

In Ukraine, according to operational data, 10 million tons of barley were threshed, which corresponds to the USDA forecast and exceeds last year's 7.95 million tons, while the Ministry of Agriculture of the country estimates the harvest at 9.3 million tons. as of August 27, Ukraine exported 2.4 million tons of barley, which is 25% higher than last year's pace. The forecast for barley exports has been increased from 4.23 million tons in my 2020/21 to 5.5 million tons this year.

Purchase prices for barley in the ports of Ukraine remain low and amount to 2 240-245/ton or UAH 7300-7400/ton, although wheat prices are growing rapidly and reach 2 260/ton for feed and.270-280/ton for food grain. Purchase prices for corn in ports are $240-245/ton, which puts pressure on barley prices, so buyers of feed grain do not want to pay an extra price for barley.

A possible reduction in the corn and barley harvest in Russia against the background of increased domestic consumption will reduce the volume of export offers, which will increase demand for Ukrainian barley.

This week, the Turkish agency TMO will hold a tender for the purchase of barley, which will become another indicator of prices for Black Sea barley.