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Bethan Wilkins

Analyst

AHDB Pork Market Intelligence

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Feed barley discount or feed wheat premium?

Home \ Prices & Stats \ News \ 2017 \ January \ Feed barley discount or feed wheat premium?

The price relationship of feed wheat and barley influences the usage of these feed grains. As it stands, the spot premium of UK ex-farm feed wheat over feed barley is just under £18/t and has averaged around £18/t so far this season (Jul-Jan).

In theory, this would incentivise greater barley usage in animal feed production, at the expense of wheat. However, in practice this does not appear to be the case. Season to date (Jul-Oct) barley usage in GB animal feed production is down 10% on the year, while wheat inclusions are up 4% over the same time frame despite the larger premium.

This season UK wheat is in a more unusual situation. Domestic output for harvest 2016 is estimated to be 13% lower than the previous season at 14.4Mt. Furthermore, a combination of a larger area planted to varieties suitable for bread making and a high proportion of varieties hitting a typical high quality bread wheat specification, has led to a less comfortably supplied feed wheat market.

Despite this, demand for the grain is still strong, driven by the poultry and bioethanol sectors. Similar to wheat, we have seen a reduction in total barley output this season, of 10%, to 6.7Mt. However, the UK has seen more of a mixed bag in terms of barley quality with average grain sizes smaller, giving rise to a higher proportion of feed barley being available.

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While at face value there is probably less barley available this season, the relative availability is not as tight as that for wheat, driven by subdued barley demand domestically and for export.

A combination of these factors has contributed to a rise in domestic feed wheat prices. To an extent this has led to an increase in feed barley values, but the gains have been capped somewhat by the more subdued supply and demand situation that barley finds itself in. 

To read more about the relationship of feed wheat and barley prices in the UK, click here.

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Millie Askew, Analyst
millie.askew@ahdb.org.uk, 024 7647 8968