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Objectives. Review historical production trendsReview market factors and their impact on price and productionProvide overview of contracting options for barley in 2010Update on National Barley Growers Association issues. US All Barley Recent Planting Trends. United States
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1. Barley OutlookIBMS Conference on Barley Production and Management for Profit Dave HendersonPresidentNational Barley Growers Association
3. US All Barley Recent Planting Trends United States – All Barley Planted Acres
2006: 3,452,000
2007: 4,018,000
2008: 4,246,000
2009: 3,567,000
5. NBGA Member States All Barley Planted Acres
6. US All Barley Recent Production Trends United States
2006: 180,165,000 bushels
2007: 210,110,000 bushels
2008: 240,193,000 bushels
2009: 227,323,000 bushels
Reasons for upward trend
Depletion of stocks from 2003 – 2005
Good production years
Higher corn prices
Barley has been substituted for feed
8. NBGA Member States All Barley Production
9. Recent Barley Cash Prices Malt Barley Cash Price
November 2006: $7.00 per cwt
November 2007: $12.00 per cwt
November 2008: $10.50 per cwt
November 2009: $11.50 per cwt
Feed Barley Cash Price
November 2006: $7.00 per cwt
November 2007: $10.50 per cwt
November 2008: $6.80 per cwt
November 2009: $6.75 per cwt
11. 2009 Barley Crop Quality by State Idaho - Overall yields very good, dryland yields exceptional; low proteins and low plumps
Minnesota - Record yields; very high percent plump and acceptable protein levels; crop is somewhat stained and discolored
Montana - Dryland yields from 40 to well over 80 bushels/A with plumps in high 90's and protein around 11.5; irrigated barley quality also good
North Dakota- High plump, heavy test weights and low proteins; good yields anywhere from 70 to 90 bushels/A; late season crop issues include some mold and mildew and discoloration due to rain at harvest.
12. Market Factors World barley trade expected to increase by 6% to 19.3 MMT
US exports projected to fall by 39% to .55 MMT,due to greater competition from Australia, Canada and Black Sea region.
World barley consumption projected to increase 6% to 144 MMT, and US usage is expected to increase 18% to 5.2 MMT.
World barley carryover stocks are estimated to jump 49% to 27 MMT, while US carryout is projected to decrease by 1% to 1.5 MMT.
13. Barley Contracts for 2010 Contracts available for both malt and, in some states, feed barley
Contracts becoming more creative
Key considerations for contracting
Price
Discount schedule
Storage and delivery
Act of God Clause
14. Malt Barley Contract Components Price
Most pricing is tied to a company directed price formula
Based on percentage of wheat futures market
Other factors subjectively considered
Price of other commodities
Input costs
Prices change on a daily basis
Grower has option to lock in a price on fixed number of bushels
15. Malt Barley Contracts (cont’d) Storage payments
Contract may require growers to store their production
Storage payment range in the area of $0.04 per bushel per month
16. Malt Barley Contracts (cont’d) Production
Most contracts production based
Grower can sign contract to confirm fixed number of bushels at a given date
Grower has some flexibility
Some contracts require legal description of where acres are planted
17. Malt Barley Contracts (cont’d) Additional considerations:
Local delivery
Some malting companies work with local elevators - contact your local elevator to see if a program is available
Discount schedule
Evaluate for probability of achieving the top grade level
Act of God clause
Key consideration for growers and lenders
18. Feed Barley Contracts Feed barley contracts currently available in ND – other states working on establishing them
Contracts typically for bushels
Act of God clause is desirable
19. NBGA Issues Crop Insurance
COMBO rollout expected 2011
Price derivation
COMBO proposes a factor of 80.6% of the Chicago Board of Trade corn contract price for calculating Projected and Harvest Prices for barley
NBGA resubmitted comments and data to RMA requesting this factor be established at 92%
Future farm programs likely to focus more on risk management
20. NBGA Issues (cont’d) Crop Insurance
New insurance policy for Specialty Type Barley will be available in 2010, for the following categories of barley:
Waxy hulled food barley
Waxy hulless food barley
Hulless barley
Malting barley
Certified seed grown under production contracts, types 1-4
These specialty types of barley will be insured for overall production loss with the insured value based on actual production contract prices. (Malt Endorsement quality losses will not be covered)
This new policy is the result of the Enhanced Price proposal submitted by the Idaho Barley Commission and National Barley Growers Association in July 2006.
21. Specialty Type Barley Counties
22. NBGA Issues (cont’d) Research
NIFA FY 2010 Special Barley Grants
$471,000 Regional Barley Gene Mapping Project
$547,000 Barley for Rural Development
23. NBGA Issues (cont’d) Trade
Submitted comments in support of South Korea and Columbia Free Trade Agreements
Signed letter asking for new compliance panel to update recent WTO ruling on the USDA GSM-102 export credit guarantee program
Dan Kidd, NBGA director from MT, represented barley growers at Doha negotiation meeting in Geneva in early Dec.
24. NBGA Issues (cont’d) Climate Change
Proposed Policy Statement
NBGA will support federal climate change legislation that results in a net economic benefit to US barley producers based on comprehensive, science-based analysis. NBGA does request that USDA conduct comprehensive, detailed scientific and economic analysis of that legislation or regulation prior to its implementation. NBGA opposes any implementation of greenhouse gas legislation or regulation until other major carbon emitting countries agree to similar regulations and costs.
25. NBGA Issues (cont’d) Transportation
S.2889 - Surface Transportation Board Reauthorization Act of 2009 approved in December by Senate Committee on Commerce, Science and Transportation
Includes a number of needed reforms that will improve competitive conditions and transparency in the rail industry and provide improved mechanisms for challenging rail rates.
26. Summary Barley will continue to be a viable crop for many growers
The National Barley Growers Association will continue to promote the importance of barley
Questions?