Malting barley premium narrows in 2025-26

SASKATOON — Premiums for malt barley in Western Canada have been unusually small in 2025-26, according to analysts.

Neil Townsend, chief market analyst with GrainFox, can think of a few reasons why that is the case.

Perhaps the most obvious explanation is that farmers produced a huge crop of barley last year, and there was simply more malt-quality barley than there was demand for the product, he said.

However, there are also long-term structural factors at work.

North Americans are drinking less beer.

“A lot of the lustre of beermaking and the microbrews has kind of diminished,” he said.

Perhaps an even bigger issue is the rise of GLP-1 (glucagon-like peptide-1) weight loss drugs.

“They don’t just curb your appetite for food, they curb your appetite for vice,” he said.

“You gamble less and you drink less.”

Townsend said the days of people drinking 10 beers an outing have given way to maybe three or four.

And there has been a shift in attitude with the most important beer drinking demographic.

“One big thing in North America is that young people don’t go out and party,” he said.

“Young people are just not drinking to the same extent.”

And when they do drink, they often choose coolers, White Claws and similar types of beer alternatives.

“There’s no growth in the sector,” said Townsend.

“There’s significant headwinds in (the brewing) industry.”

Why it Matters: Farmers need premiums to pay for rising input costs.

LeftField Commodity Research said another reason for the poor malt barley premium has been the small spread in offer prices to China, Canada’s main barley export market.

“Prices for imported malt barley in China have effectively lost their entire premium relative to feed,” the firm said in the May edition of the Market Vantage report it writes for Alberta Grains.

Townsend wonders if that has something to do with Australia being back in the Chinese market and providing stiff competition.

It could also have something to do with the rise in popularity of Fair Average Quality (FAQ) barley in that market. That is barley that bridges the gap between malt and feed barley.

Townsend also wonders if beer demand is slumping in China due to its aging population and high levels of youth unemployment.

Another factor for the shrinking malt barley premium is strong feed demand.

U.S. corn exports have been defying expectations all year long. The U.S. Department of Agriculture is forecasting nearly 84 million tonnes of exports in 2025-26, the largest program on record.

“That’s an indication that there’s strong feedgrain demand offshore,” he said.

Another indication are the robust feed barley prices in the Mediterranean Basin, signalling there are lower supplies of feedgrain in that region of the world.

Townsend has noticed that Canada is exporting a lot of barley in 55,000 tonne chunks, which suggests they are probably bulk cargo shipments of feed barley.

Supplies in Vancouver, Prince Rupert and the St. Lawrence Seaway are often divisible by 55,000 tonnes.

The line companies much prefer shipping 55,000 tonnes of feed barley to one destination rather than the same amount of malting barley to three places when the two products are similarly priced.

Statistics Canada is forecasting a five per cent increase in barley acres in 2026-27. Agriculture Canada believes that will result in 8.34 million tonnes of production, a 14 per cent drop from last year.

Townsend has acres going up seven per cent. He said it is premature to be forecasting production, but last year’s superb yields were an outlier.

If it turns out to be a poor production year with sprouted barley, the malt barley premium would widen in a hurry, he said.