Planted acreage for barley is expected to be lower, both in North Dakota and nationally, for the 2018 cropping year. Barley production has been in decline since 2015 due to above-average yields and higher-than-average acceptance rates. This has resulted in fewer malting barley contracts being offered to growers, according to Steve Edwardson, administrator of the North Dakota Barley Council.
“Barley production in North Dakota is largely targeted to malting and brewing applications, thus resulting in barley being produced under contract as a specialty crop,” Edwardson said.
The recent National Ag Statistics Service (NASS) planting intentions report said growers in N.D. intend to plant 400,000 acres of barley this year, a decrease of 23 percent from the planted acreage of 520,000 acres last year. Nationally, barley acres are expected to reach approximately 2.3 million acres, or 8 percent less than last year’s figure.
Montana is expected to lead the nation in barley production this year with 720,000 acres planted, followed by Idaho’s 560,000 acres and North Dakota holding the third-place position.
Edwardson noted North Dakota has exhibited a wide swing in barley acres in recent years, from 1.1 million acres planted in 2015 to 400,000 acres expected to be planted this year. Acreage planted to barley is highly dependent on the availability of malting barley contracts.
“Growers report that the 2018 malting barley contracting programs have been reduced significantly from last year,” he said. “Buyers have reduced contracted production from 50-80 percent from 2017 levels due to abundant carryover stocks in storage.”
The contracts that were offered filled up early and buyers indicated that it will simply take time to process and deplete current inventory levels, Edwardson noted.
The latest NASS grain stocks report pegged barley stocks in all positions in North Dakota at 32.8 million bushels on March 1, which is a decrease of 8.1 million bushels from the storage stocks last year on March 1. Nationally, there has been an 11 percent decrease in barley stocks from March 1, 2017 to the same date this year.
Changes in the industry – Recent years have seen changes in varieties being grown by producers as well as changes within the malting and brewing industries.
Growers in the state are shifting from 6-row barley varieties to 2-row barley varieties, he said. This is due to an increased demand for 2-row varieties in the malting and brewing industries. In 2005, approximately 80 percent of the barley grown in North Dakota was 6-row varieties. Recent data from NASS and industry sources indicates 65 percent is now 6-row varieties and 35 percent 2-row and some are indicating that ratio is actually closer to a 50:50 ratio.
The malting and brewing industries are also undergoing some changes, Edwardson noted. AB-InBev is phasing out their malt barley receiving facility in Sidney, Mont., thus indicating a shift to reallocate barley production closer to infrastructure in eastern North Dakota and western Minnesota. Cargill Malt has announced closure of its malting facility in Spiritwood, N.D.
“Shifts in the utilization of infrastructure impact barley production regions,” he said. “In general, growers remain optimistic about barley production, and can produce what the industry demands.”
Outlook – Mexico continues to show near-term potential as an export market for U.S. malting barley, Edwardson said. Mexico imports of U.S. barley have been in the area of 400,000 to 450,000 metric tons over the past five years according to the USDA Economic Research Service. However, exports of feed barley are minimal due to adequate supplies and competitive pricing from Australia, Canada and Ukraine.
The International Grains Council projects barley stocks will tighten globally as demand for barley increases for both livestock fed and malting for beer. Developing countries are increasing meat production thus driving up the increase for feed barley, he noted.
Beer consumption in China, Asia and Latin America is expected to increase, thus demanding more malt. Global barley production is anticipated to experience modest but steady growth over the next five years.
Price – Current spot cash prices for barley in North Dakota are soft due to significant carryover inventory and low contract availability. Spot cash prices for malting barley, at the end of April was in the range of $2.90 to $3.50 per bushel, with many locations offering no bid. Feed barley prices fell in a range of $2.60 to $2.90 per bushel. Feed barley prices have experienced modest increases over the past several months due in part to steady demand in pet food and general reductions in carryover stocks.