Feed Grain

[Cattleman]

I am looking for some thoughts on feed grain supplies/prices. Given all the troubles out there....but the low barley acreage...and higher world prices, are we looking at feed barley with more up side or down side potential? What about feed wheat? Also, in years of big feed wheat supplies what kind of relationship does feed wheat have to feed barley.

Reading some of the US reports....if everything aligned, $5 corn came up...how competitive will we be on feed grain this year in Western Canada? Thoughts? (I guess I am asking for the perfect crystal ball!)

[charliep]

I'll give you my prognostications and hopefully someone else will jump in.

Expensive feed grains will be a North American reality. Don't know about $5/bu corn but $4 to $4.50/bu futures likely. Convert to delivered Southern Alberta (assuming a 75 cent/bu basis and a 95 cent loonie) will yield landed prices in the cdn $200 to $220/tonne area. Distillers grains have also increased with recent values $190/tonne ish.

At 8 mln tonnes western Canada barley production (real number unknown), the S&D is tight to inadequate to cover livestock feeding needs. CWB malt barley program 2 MMT plus 500,000 tonne barley exports? Amount of feed wheat an unknown but likely bigger than normal. Livestock numbers down but MCOOL keeping feeding north of the border (you are closer to this than I am so have better feeling).

Feed wheat verus barley value? Feed wheat (assuming 56 plus bu weight) should be worth 5 to 10 % more in rations. Having said, feedlots will try to buy for feed barley values to a 5 % discount to adjust for feeding issues with a hotter feed and impact on animal health (too hot a feed/acidosis issues). Answers on the hog side are different.

I would prepare myself for $4/bu plus feed barley and $5/bu plus feed wheat.

[charliep]

should be 500,000 tonnes feed barley exports.

[charliep]

I left your question on cost of gain advange alone as well. Not close enough to venture a guess. Feeding livestock isn't going to be cheap anywhere in North America.

[IAMTHEMOLE]

Lots of forage coupled with high grain costs, high feeders and a struggle to receive higher prices for finished cattle will keep feedlot levels at manageable populations. Feed prices may hit $4.00 a bushel but there better be a continued strong export demand base because the domestic demand is not here. why are the higher prices for barley in october and november. you can buy all the barley you want for 3.40 a bushel southern alberta right now.

[Digger]

I am sure there would be lots of buyers @ $3.40 in Southern Alberta. Whose selling? I think $3.40 is a feeders distant pipedream.

[IAMTHEMOLE]

Farmers cleaning out bins for the pending crop, grain elevators making space for pending crop and smaller grain companies just happy to move some product because everyone else is full. plus 3.4 delivered off the combine still buys you lots of barley. i have managed to buy 7500 mt at this price in the last month of panic. demand is not here yet. that is enough for three months of usage. No question that prices come the end of harvest will be higher but feeders should be filling their boots while we can. i know i am

[charliep]

Your comments are why the trade/CWB were able to put together the export business and effectively fly under the radar (source 250,000 tonnes without impacting the domestic feed market).

[charliep]

While I have the livestock and grain side on the same thread, is there any hope of putting some volume and open interest back into western barley futures? Are the contract specifications right now/fits with common practice in the cash market? Are there some things government, industry should be doing to promote western barley futures use - education, incentives, etc.? Help!!!!

[IAMTHEMOLE]

There is a 50 lot(1000) mt offered in each oct10 and dec 10 barley futures respectively. The oct can be bot for 180 /mt del within the defined area and the dec 10 can be bot for 185/mt. might be interested eventually but when cash grain is bot for 156- 157 del Calgary area why pay more. offers for October thru December are for 175/mt del. Essentially if the most uneconomical location of this defined delivery area is not interested in the offer then one could come to the conclusion that the price being offered is too high. So why not lower the offer. Todays bids for the oct and dec contracts were 152 and 157 respectively. Most likely just as out of whack as the offers. If there were legitimate offers of mid to upper 170's for dec and 170 to 172 for oct would business take place. i think so. I think it is the right number. These numbers reflect future delivery not spot values.

[charliep]

Recognize the issue on the wide bid offer spread. I guess ICE needs a market maker to come in. How to attract is the challenge.

[charliep]

I kill thread discussion but a frustration (and chaffmeisters) is the $180/tonne offer side is likely where feed barley export business could have been (or even still can). CWB offer up and down highway 2 has been in the same range you are paying for barley delivered southern Alberta. $160/tonne for nice number. $50 to $60 to Vancouver (elevation, rail and margin). $30 to $40 per tonne that disappeared. An active futures market and a risk tool for exporters would have likely proven current offer side out.

All theory but interesting speculation for a rainy day.

[IAMTHEMOLE]

my bid of 157 del is for delivery now not in 6 weeks when the farmer will be still combining and the train must be loaded. The will want the grain dry or else. I'm starting to wonder if I'm paying too much. Space will be KING this fall.

[IAMTHEMOLE]

not sure but i think farmers can deliver to the designated area of the western barley futures. All you need is a clearing house to validate your stocks.

[charliep]

Your points also have me asking questions about the barley stocks number out a week today. Would seem July 31 feed barley inventory will be bigger that at least what I expect and feed consumption during 2009/10 lower. Will be smarter September 8.