"It's hard to get too negative on barley when you have corn prices as high as they are," said MarketsFarm analyst Bruce Burnett.
The December corn futures contract was trading at US$5.39 per bushel as of Oct. 20, and barley is fetching a premium over the delivered price of U.S. corn in Lethbridge.
"You're talking some pretty expensive corn to replace very expensive barley," he said.
Imported U.S. corn will keep a lid on Canadian feed barley prices, but they will still remain at near-record values, said Burnett.
This means the energy component of the feed market will remain at elevated levels, but there has been some softening on the protein side of the equation.
"The protein feed market is going to be burdensome," he said.
Mac Marshall, vice-president of market intelligence with the U.S. Soybean Export Council, said that has a lot to do with shifting dynamics in the crush sector.
"We're crushing more for oil than we are for meal," he said during a recent webinar organized by USSEC.
"The natural implications of that are we're probably going to have a little more meal to sell."
Marshall said soymeal values have plunged 20 percent since the start of the calendar year, while soy oil prices have soared due to tight global vegetable oil stocks.
Randy Mittelstaedt, head of market insights with R.J. O'Brien, agreed with that assessment.
"Over the next 12 months for sure we most likely are going to be a bit heavy on the meal side in the U.S.," he said.
That is happening at the same time that hog and pig inventories are falling in the U.S., said Mittelstaedt.
The U.S. Department of Agriculture reports there were 75.4 million hogs and pigs as of Sept. 1, 2021, down four percentage points from a year ago.
Another factor to consider is the rebound in U.S. ethanol production, which is resulting in more distillers grain.
Jim Mintert, director of the Center for Commercial Agriculture at Purdue University, said the USDA is forecasting 5.2 billion bushels of corn use in the ethanol sector in 2021-22, up from 5.03 billion bu. last year and 4.86 billion the year before that.
He believes the number will be even higher than the USDA's estimate based on recent ethanol margins of about US$0.66 per gallon.
"It's the strongest margins we've seen, certainly since the pandemic," he said during a webinar hosted by the university.
Weekly ethanol production numbers recently climbed above pre-pandemic levels after being well below those levels for most of 2021.
He believes many plants are once again operating at full capacity, which means less corn and more distillers grains available for feed markets.
Burnett said another reason to remain bullish on corn and barley prices is sky-high fertilizer prices, which may dissuade some growers from planting corn in Brazil and Argentina this year and the United States next year.
"It will change the economics for those (producers)," he said.
Barley is also going to be in a tough battle for acres in Canada, where cash canola prices were $22 per bushel as of Oct. 20. He does not expect barley acres will change much at all from last year's levels.
That is despite expectations for "extremely tight" barley stocks heading into the new crop year. There is just too much competition from other crops like canola, durum and pulses.
