The Winnipeg Commodity Exchange has announced that it is ready to provide international risk management tools for barley should the single desk be removed. In preparation, it is posting weekly international prices for feed and malt barley on its website. There is also market commentary provided by Informa Economics regarding the feed barley market on the WCE site.
The report seems to confirm some of my thoughts from the weekend:
Obviously, the lack of export movement from the CWB is having an impact on feed barley values in some regions of the prairies. Granted the Pool is based on an average of sales over the last six months of the crop year. However, since there are likely very few sales against that Pool yet, it is puzzling as to why the PRO is not more competitive than it is. The fact that feed barley is not being exported out of Saskatchewan does appear to be limiting non-board bids at this time.
And it's not only a couple of sales to Japan:
At the time that this article was written, Middle Eastern buyers were paying as much as US$246 per tonne for feed barley on a CIF basis. It would likely take about US$45 per tonne to ship barley from Canada to the Middle East, leaving the price at about US$200 per tonne at the St. Lawrence or Vancouver. Using a Canadian dollar of 86.5, that converts to about C$231 per tonne. If we assume about $16 per tonne for cleaning and elevation, feed barley would be worth about C$215 per tonne, in store Vancouver or the St. Lawrence.
Under our current system, this is a revelation. In a marketing choice environment, it's just business.
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