New Crop Barley

[rain]

Charlie

What are your thoughts on new crop barley. New crop is a discount to old. Do you think October will come into carry? Presently new crop barley delivered Cagary region can be booked at$3.13 delivered, ($5.00/MT under the Oct Futures.

Wheat and canola futures are discounted as well. I am curious to how you think this should be handled.

[TOM4CWB]

Rain,

I think your name says it all!!!!!

Moisture is the number one issue, if you have subsoil moisture, looks like a profitable year ahead!!!

But, how much subsoil moisture is their in western Canada? Not much for a very many people.

Hedging is supposed to manage risk, but locking in now might create more than it benefits!!!

I would want to see 1.5 feet of snow before I get excited about doing any marketing next year, what about you?

[rain]

I agree, any hedging this year should probably done with puts, wheat and barley in particular. Canola we may not even take basis for the first time in a long while. But we must remember, to in some way shape and form be willing a ready to protect oursevles.

Back to my original question do you think new crop will go to carry for wheat, barley and canola?

[TOM4CWB]

Rain,

My best guess is that in the spring, if things still look dry, the market could then pay this type of a premium.

I would suggest that a premium is already in place as this has been a drought year and short supply to start with. Barley at $150/t Oct, after we add back the Crow that we used to receive, has to be in the top 70% of the market in the long term. This means that the corn in the US will really start substituting in here as barley maintains such a high premium for an extended period.

If feeders cannot assure a feed supply, and must invest infrastructure to feed cattle and hogs anyway, then barley at some point in the future must return back to a more traditional spread with corn.

Will this happen by next fall?

Maybe to some extent, but I am sure everyone is hoping for RAIN!!! This would bring back down the corn barley spread faster than anything else!!!