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WINNIPEG, Manitoba (Reuters) - Canada's barley exports have dwindled to a fraction of their former might, as Argentina muscles in on trade and domestic cattle feedlots offer farmers better prices than exporters.
Through March 25, Canada was on pace for exports of 1.3 million tonnes in 2011/12 (Aug/July), similar to the past two marketing years, according to Canadian Grain Commission data. Those three years have recorded the lowest Canadian barley exports in at least the last three decades, except for the 2002/03 drought year.
"Over the long term, (the decline) is about just far more competitors coming into the market," said John Pauch, coarse grains analyst for Agriculture and Agri-Food Canada, the federal farm department.
Two years ago, Australia overtook Canada as the top shipper of malting barley, used in brewing, according to International Grains Council data. In total barley trade, Canada looks to slip behind Argentina this year to sixth place.
Argentina's rising stature in barley trading is largely due to growers' disillusion with their government's tight controls on wheat exports, but is also evidence of South America's clout in world grain trading, as productivity increases and more land enters production.
Argentina's barley output rose 38 percent to 4.1 million tonnes in the 2011/12 harvest that finished in January.
More than half of that total is destined for export, with Argentina expected to ship 2.5 million tonnes this year, more than double Canada's total, according to IGC.
While Argentina has made inroads in Saudi Arabia - the world's biggest barley buyer - Canada's barley exports there are down 50 percent from August through January and look to fall far short of the five-year average, Statistics Canada data shows.
Unlike export-driven Canadian crops like wheat and canola, most of the country's barley stays home to feed cattle or supply maltsters.
In the past year, domestic feed prices have regularly beat export values, and crops in other countries have avoided weather-related disasters that can force importers to pay a premium, said Bruce Burnett, director of weather and market analysis for the Canadian Wheat Board (CWB).
"We'd have to see a disaster in one of the major exporters to see a lengthy period of time where the exports bids are going to be competitive with our domestic prices," he said.
The high price and tight supplies of U.S. corn over the past two years have shifted even more Western Canadian demand to barley, which was already the main feed for cattle, said Jerry Klassen, manager of Swiss-based grains trader GAP SA Grains and Produits in Winnipeg.
There is also simply less Canadian barley to go around, as flooding reduced plantings during the past two years, and profitable canola ate up more acres.
Most analysts expect Canadian farmers to plant more barley this spring, but global sowings could also increase, as European and Ukrainian farmers plant barley on land where winter crops failed, Burnett said.
Canadian barley exports could rebound in 2012/13, partly because there will be more players in the market, said Alberta-based agriculture analyst Ron Frost.
Starting with the 2012 harvest, Western Canadian farmers will be allowed to sell barley and wheat for export or human consumption to any buyer, rather than just the CWB.
"I believe there will generally be a pickup in export activity, which only makes sense when you have a half dozen companies out there developing relationships and putting deals together," Frost said. "As opposed to just one entity, CWB, that may not have always been interested in a small 20,000 tonnes deal with a country or party that they did not have an ongoing relationship with."
Under the CWB monopoly, the board accredited some private grain traders to handle a portion of export sales.
Canada's agriculture department is forecasting the same level of barley exports in 2012/13 as in the current year, 1.8 million tonnes.
Reporting by Rod Nickel in Winnipeg; Editing by Leslie Gevirtz