Barley Market Comentary

[shaney]

It is amazing how a lack of volatility in today's feed grain markets almost makes a person nervous. Feeders and farmers don't seem believe that the corn and barley markets can actually sit still and hold a broad trading range. It really is unbelievable how we have moved from an industry that expected feed prices to be constantly stable, to expecting violent volatility on any piece of news.

Feeders are trying to figure out if they should be locking up prices for the long term and farmers are scratching their heads if they should be selling into the future considering the acres that are being planted. This is a classic case of the supply and demand sides trying to figure out each others next move. It really does make for interesting coffee shop discussion and banter.

<strong>BARLEY MARKET COMMENTARY - Jonathan Dreidger, FarmLink Marketing Solutions</strong>

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[Hopperbin]

He does not mention anything about EU malt and its affects.

[parsley]

Wouldn't market observers with a depth of understanding substitute the following:

"This is NOT a classic case of the supply and demand sides trying to figure out each others next move, because the CWB export monopoly factor distorts and decimates a supply-demand system"

REASONS:
1. Cheap barley imports are allowed into Canada, feeding Eastern barley is allowed in Canada, but Western farmers are not allowed to export feed barley. ONLY the Wheat Board is allowed to do so. They prefer crocheting.

#2. Conflict of marketing interests...feed barley vs feed wheat: The CWB is always busy peddling cheap feed wheat, which is certainly substitutable for feed barley. Your guest even says barley is "substituted out of the market"

#3. "More [barley]seeded dragging the market lower"? Well, rather, isn't it that over the years, less and less wheat and barley is being grown in comparison to other crops grown? Barley is, overall in the scheme of cropping, a stagnating choice to grow. One can only conclude that the CWB has incompetent marketing skills.

Notes to bring you up to a farmer's speed, Shaney:

*****Supply and demand cannot factor in a legislated government institution that denies license to only Western players.

*****Supply and demand cannot factor in a legislated government institution that markets BOTH substitutable interchangably-competing crops.

*****Supply and demand cannot factor in a legislated government institution that employs unaccountable fatcat employees, who don't give one rat's mass about actually selling barley for top prices in premium markets.

In my most humbled opinion, of course.

I thought you would appreciate, lol, a farmer refreshing your memory about supply and demand on such a lovely spring morning. Pars

[charliep]

Good interview Shaun.

Did you or Jon talk about western barley futures and the current issues around value/open interest? It would seem the contract is on life support with no market maker to allow trades for hedgers. What some have suggested is the need for some excitement (read volatility) into barley prices to push participants back into the market.

Can't argue with parsley but the domestic feed barley market functions pretty well on a daily basis on the spot cash side. As indicated in the right up, forward pricing markets are more difficult - particularly if western barley futures dies. Would be nice to have international feed barley prices fully reflected in the market but will note the CWB doesn't source feed barley any more via its pooling system but rather cash trades with grain companies/deposits profits into the contingency fund. That is an issue but no one cares.

[shaney]

Charlie, I live in feedyard alley in Southern Alberta and the reality is that when you are buying or selling barley I never hear people refer to the future on barley. If anything they look at the more liquid corn future as a guide to the direction of the market. Its too bad that we cannot sustain a barley future market but it seems likely thta it will be extinguished.

[charliep]

A couple of articles from Emalt that highlight the drop in barley acreage world wide (well at least Europe and North America).

Beginning quote

EU: Trade estimates of barley production and acreage even lower than IGC’s
The latest IGC report sets the forecast of EU’s barley production at 56.5 mln tonnes this year, which represents a 9% drop versus last year.

The winter barley acreage is expected to drop by 7%, spring barley – by 11%.

Trade estimates of both the acreage and production are lower, a research note said at the end of April.

Growing conditions are still favourable, although any extension of the present warm and dry weather would be negative for yields, grain size and protein contents. Rains are forecast for northwest and central Europe.

In general one would expect a smaller crop than last year, because of a smaller acreage, a long and hard winter, late spring with delayed planting of spring grains, a lower input of fertilizer, early dryness. There is one reserve, however: in the past two years crops were surprisingly good, better than anticipated even shortly before harvest, experts point out.

United States & Canada: Barley acreage down 8% and 4% respectively
United States’ barley planted areas declined by 8% to 1.33 mln ha, industry analysts communicated earlier this month.

Of the total barley acreage, North Dakota planted 397,000 ha (last year 490,000), Montana - 320,000 ha (352,000) and Idaho – 210,000 ha, the same as last year.

Canada Statistics reports a drop of 4% of the planted barley acreage from 3.506 to 3.377 mln ha, but expects a lower abandonment. The Western provinces are estimated as follows (in 1000 ha, last year in brackets): Manitoba 271 (283), Saskatchewan 1315 (1396), Alberta 1558 (1603).

End quote.

[shaney]

Charlie, Your data is the exact reason why many analysts have a slight bullish tone to their barley commentary if demand holds strong.

[parsley]

"Its too bad that we cannot sustain a barley future market but it seems likely thta it will be extinguished."

Yes well, I recall presenting infront of a group of bloated senators, talking about needing a freed up barley export market for farmers. One senator was only interested in the current price trend of cheap barley feed for feed lot alley in Alberta because he informed me he had investments in feedlots. He too, blithely accepted curbed exports; and an "Oh,well" was his way providing support and leadership.

The people who directly benefit from a CWB monopoly inevitably ignore farmers' request for a non-restraining marketing system.

Closet CWB lovers repeatedly try to slide forward again anad again, the slippery idea that a government export monopoly is part and parcel of a normally functioning supply and demand market.

Legislated policy abnomality is never normal. Pars

[shaney]

I'm just saying that when most feedyards think about the barley market they don't really put to much weight on the barley future.

I hear way more feedyards talking about the corn future as an indicator.

[hoppsing]

Parsley, you should have a look at world prices. The export market has been about $30/mt lower than domestic all year. Do you really think the CWB should sell that? Now that would be incompetence!