Barley markets continue to skyrocket

[AdamSmith]

Barley markets continue to skyrocket

By DALE HILDEBRANT, Farm & Ranch Guide
Sunday, September 16, 2007 5:13 PM CDT


In trying to describe the latest activity in the barley markets, Randy Brag from the Valley Grain Services in Casselton, N.D., said he is almost speechless.

We are well into record high prices for both feed and malting barley and, as Brag puts it, “No one can really predict what's going to happen next. This is no man's land.

“Prices could go up a dollar so fast or we could drop a dollar just as fast. This is as speculative as I have ever seen barley,” he continued. “Barley normally moves a nickel every once in a while, but nothing like this. To a lot of us right now this market makes no sense.”

The export market for good feed barley seems to be driving the markets at this time, Brag noted. He pointed out that a lot of factors are coming together at the same time to give support to the market.

Those market factors include a smaller crop than what was first expected in many areas of the U.S. and Canada, harvesting problems in some prime barley growing areas, harvesting difficulties in Canada, strong export demand and a need to fill vessels that are either at port or soon to be coming into port, and a weaker U.S. dollar.

“With the current value of our dollar, we are very competitive on the world market for a change,” he said. “Everything is coming together to make this an incredible run.


Brag has been involved with the barley industry for 30 years and when the prices hit the $3.50 mark a few months ago he thought those were record highs.

“It is really a shock to see what feed barley prices have done - especially since feed barley prices are so over-priced compared to corn right now,” he said. “But, we don't have a domestic market setting the feed barley prices right now; instead, the export forces are driving the market. The domestic buyers aren't going to purchase feed barley at these prices, they are going to use something else.”

With good commodity prices across the board, Brag has heard rumors that the maltsters are about ready to start offering malting barley contracts for the 2008 growing season, which would be at least four months earlier than normal. If indeed contracts are being put forward at this time, Brag feels it is in response to their concern about wheat and the record high prices being offered for that crop.

“They want to keep barley acres in North Dakota and they want to compete with wheat,” he explained. “They want to give the farmers something to look at because a lot of the farmers are selling new crop wheat right now, and the maltsters want to give the growers some options to sell some new crop barley and hold acres. And one way to get acres is with high prices.”

Brag noted that there is good movement of barley from the farms to the elevators at this time, not only because of the record high prices, but also the need to open up some bins on the farm for the upcoming corn harvest.

“I think these guys are smart by cashing in their barley,” he said. “The biggest thing is to find a spot to put it.”

These record high prices were evident on all the elevator board prices listed on the smallgrains.org website. All local elevator cash prices had malting barley pegged at a minimum of $4 per bushel, with feed barley trailing by just a few cents, if not equal to malting prices.

Malting barley over the past two weeks climbed from 40 to 55 cents a bushel, with prices in a range of $4 to $4.47 per bushel. Meanwhile, the spread for feed barley was $3.45 to $4 a bushel, which represented a price increase of 25 to 75 cents per bushel from the last report.

With several elevators reporting a $4 price for both feed and malting barley, the difference between the two classes narrowed to 30 to 55 cents in a few locations and averaged in the area of 20 cents per bushel.

[AdamSmith]

Too bad a Liberal Judge decided designated area farmers need to be shut out of the feed barley export market.

These record high prices were evident on all the elevator board prices listed on the smallgrains.org website. All local elevator cash prices had malting barley pegged at a minimum of $4 per bushel, with feed barley trailing by just a few cents, if not equal to malting prices.

Listen up Horsemen thats ALL ELEVATORS, not just some super special deal at one SPOT. ALL ELEVATORS

If the BOD of the CWB had any sense and decency, any regard for the financial well being of prairie farmers they would allow what the judge disallowed.

They would wave any licencing requirements for malt and export barley until parliment has passed legislation freeing up barley and ask the Libs to help the government get that legislation passed.

Or they could risk the government bringing forward legislation that includes wheat as well.

[charliep]

European 2 row malting barley (French) are currently about USD $450/tonne. That $10/bu for those who prefer to look at the world this way. From e-malt (http://www.e-malt.com/)

Also comments about the impact of drought on Australia with barley production expected down at least 1 million tonnes.

An article about concerns Japanese brewers are expressing about the availability of malt barley supplies given the competition for acres between all crops this spring.

[charliep]

More newsletter stuff I find interesting. Strange to compare an open barley market to a single desk. I have to note the complaints about logistics from the CWB versus the US which can complete sales on time. Canadian grain may have flowed south through Duluth/Portland if the Canadian system couldn't have handled the volumes from a logistics side.

Quote - U.S. Grains Council: USDA Reports Tightening Supplies Push Barley Export Sales to Triple Last Year

According to USDA, coarse grain trade hit record levels with 2007/08 numbers increasing by more than 4 million metric tons this month to a record 115 million.


USDA reported that global demand for feed grains has been outstripping production and U.S. corn exports have filled the bulk of this additional demand.


Specifically, corn trade increased by 3.7 million tons to a record 90 million tons.


However, President and CEO of the U.S. Grains Council Ken Hobbie said corn producers are not the only beneficiaries in the current export scenario.


“As a result of other countries, specifically the Ukraine, having a poor barley crop this year due to natural calamities, customers are relying on U.S. farmers to fulfill demand,” said Hobbie.


“Tightening foreign supplies and increasing prices have boosted U.S. barley export sales to triple last year’s level.”


In the past month world barley prices have jumped $80 per ton, which is a 25 percent increase, to a record $350 per ton.


The Ukraine previously accounted for 16 percent of world exports, but due to the poor crop this year export restrictions were imposed to ensure that there are sufficient domestic supplies to soften internal prices.


In addition, Australia, which normally supplies one-third of world exports, is facing lower crop prospects and depleted old crop exportable supplies, according to USDA statistics.


Hobbie said Council programs taking place across the globe helped educate feed mills and other importers of the benefits of U.S. barley as a feed alternative.


For example, the Council currently has feeding trials and other programs to encourage the use of barley in the livestock sector in Mexico, Japan, Taiwan and Vietnam.


Hobbie said the Council is planning to conduct feeding trials in Mexico using barley and distiller’s dried grains.


In December trials will be conducted in Vietnam’s aquaculture sector using barley as the feed ingredient.


Free trade agreements currently up for review by Congress will create additional opportunities for U.S. barley producers, according to Kevin Natz, USGC director of trade policy.


“Congress granting final approval of free trade pacts with Peru, Panama, Colombia and South Korea will give us an opportunity to heighten demand and broaden access for feed barley,” he said.

[charliep]

CWB barley fax on feed grain prices (will be in this weeks Western Producer).

US no. 3 yellow corn (gulf) Oct to Dec Shipping USD $163 to $165/tonne

US barley (Pacific North West) Sept to Dec USD $273 to $279/tonne.

[TOM4CWB]

Charlie,

Are the simple facts of life that the CWB sold the 2007 crop already... and this is forcing the rest of the world to pay for what is left over?

The domestic CWB "Pro Bono" feed policy SIMPLY PUT; means the remainder of the 2007 barley not presold by the CWB is reserved for the livestock industry!

A good deception will be to SAY that IF we shipped 5mmt of malt barley... we "might" get the pool up $40/t.

Reality for barley now is simply the arbitage with the corn market in the US... nothing more; no market access for our barley internationally.

[charliep]

I will get the comment in before the CWB guys do but will note that even an open sells crop early at lower prices. There is nothing wrong with either a farm manager, the open market or single desk doing this.

What is the issue is the lack of connection between delivery and pricing in the current single desk environment. That is the ability of the CWB to short the market without having farmer delivery commitment.

Open market. The farmer signs a contract for a percentage (not all their crop). When the time to delivery comes, they fill the contract (assuming the crop meets the quality specification) at the price agreed to. If the market has gone higher, the next loads will be sold at the higher price. There is a constrant set of signals that provide a farmer guidance in what they should do. Burbert calls this confusion. I call it a market.

The CWB forward sells. The price is below the current market. Additional business will be at much higher prices/support pool returns. No market signal so no way to generate deliveries. A farmer marketing decision has to be based on blind faith versus a true signal.

[TOM4CWB]

Charlie,

If a "single Desk" sells grain no grower will deliver... because the price is too low... there is a big problem.

The CWB should only be allowed to pre-sell grain it has a supply commitment backing the sale by grain growers. Otherwise it is pure speculation.

[FarmRanger]

"The CWB should only be allowed to pre-sell grain it has a supply commitment backing the sale by grain growers."

And that, in a nutshell is why we now are $2 per bushel below the current world price. Someone with no financial interest speculating with someone else's livelihood.

[TOM4CWB]

FarmRanger;

Here is an interesting statement:

"If it takes force to impose your ideas on your fellow man, there is something wrong with your ideas. If you are willing to use force to impose your ideas on your fellow man, there is something wrong with you."

http://www.freedominion.ca/phpBB2/viewtopic.php?t=86799

Posted: 09/ 07/ 07 11:22 am Post subject: Grainy image

--------------------------------------------------------------------------------

Grainy image

By LICIA CORBELLA

With apologies to the Star Trek franchise, the mangling below of the Starship Enterprise's mission statement pretty much sums up the simple goal of most of Western Canada's barley growers:

"A free market, the final frontier. These are the voyages of most grain farmers in Western Canada. Their decades-long mission: To explore strange new worlds of marketing their own grain. To seek out new freedoms and new opportunities. Not to boldly go where no man has gone before, but to simply go where any eastern farmer already goes."

They want, in short, to sell their own grains to whoever they want instead of having to market their grain through the Canadian Wheat Board.

Western farmers already do this with numerous crops including canola, peas, lentils, feed barley and even oats. In the case of oats -- which used to be marketed only through the CWB, that market has flourished outside of the single-desk selling of the government agency.

Noel Hyslip, from the Trekky sounding town of Vulcan, Alta., is just one of thousands of western farmers who voted 62.2% in favour of marketing choice for barley in a federal government plebiscite in March.

But democracy be damned! On July 31, just one day before the federal government anticipated "that marketing choice for Western Canada's barley growers will be a reality by Aug. 1," a Federal Court ruled a change in CWB regulations had to be approved first by Parliament, something the Conservative government plans to appeal.

Hyslip, who was reached while hauling a load of peas into town to sell at a "good price," says he's glad he didn't grow malt barley again this year.


"On the day of that federal court ruling, malt barley prices dropped 70 cents a bushel," says Hyslip, who grew some feed barley instead, which he is allowed to market to whomever he wants.

Last year, Hyslip made an extra $80,000 by selling his malting barley as feed barley, fetching almost $1 more per bushel than the CWB managed to get for malting barley.

"I sold my malting barley for feed because the feed market was paying more -- it should be the exact opposite -- but the CWB sold most of the barley too soon and too cheap and farmers lost out, as usual. They've done the same this year."

Hyslip, 47, has paid dearly for his fight for freedom and equality.

In November 2002, Hyslip, along with 12 other Alberta farmers, was thrown in jail. His "crimes?" Along with a convoy of other Alberta farmers, he took a truckload of grain and sold it for a higher price than he would have gotten from the CWB. He was found guilty of a customs offence and spent eight days in the Lethbridge, Alta., jail before a couple of local farmers took up a collection of $9,000 to get the father of three children back home.

Ken Ritter, CWB board chair, who was reached as he harvested durum wheat on his farm near Kindersley, Sask., says the prices the CWB gets for its farmers, are about on par with what farmers in the U.S. get for their freely marketed products. An odd admission, to be sure.

Pro-CWB farmers often argue they can't give some Western farmers the right to opt out of the wheat board and sell their grain on the open market because the entire grain market will collapse from the free farmers "cutting" the price.

Funny how the U.S. farmers do as well as the CWB? So, this bizarre, other-worldly debate continues:

Should the quest to work in a free market still be the final frontier in a democracy?

source
_________________
All the great things are simple, and many can be expressed in a single word: freedom; justice; honor; duty; mercy; hope ~ Sir Winston Churchill

"The best argument against democracy is a five-minute conversation with the average voter."
-Sir Winston Churchill

"If something is about to fall off a cliff, it deserves to be pushed."
-Friedrich Nietzsche

[agstar77]

You like interesting statements T4? In their Sept. 6 newsletter, U.S. Wheat associates claim the open market in the U.S. is the buyers best friend and that Canada and Aust. marketing agencies are artificially raising wheat prices. Hmmm!!

[Fransisco]

You mean this one agstar?

<blockquote>1. The Wheat Buyer’s Best Friend

Amid the unsettling news about the global wheat supply, there remains some comforting news: the U.S. wheat industry’s hallmark open market system is the buyer's best friend. In this dynamic wheat trade market, the U.S. remains the only truly reliable milling wheat supplier in the world.

In the genuinely open market we have in the U.S. today there is always wheat available at some price, both to domestic and international buyers. Supplies can be plentiful or tight, but the system finds a price that rationalizes the supply/demand balance. As the current tight supply situation leads other exporters to pull back from the market, the world's wheat buyers can take comfort in the fact that in the U.S., the store is always open to them.

U.S. wheat supplies will not be withheld from the world market. The domestic reaction to the 1980 grain embargo against the Soviet Union was “never again” and a federal law was passed ensuring that any sales embargo by the U.S. cannot single out agriculture. Additionally, export taxes are unconstitutional in the U.S.

Export taxes or other restrictions are now in place in several wheat exporting countries and are being contemplated in others. Australia, Canada and China practice discriminatory monopoly price and export controls. Together, these restrictions distort trade and currently are helping to artificially drive up global wheat prices unnecessarily to the detriment of all importers and consumers. These policies work against the interests of millers and force the rest of the market to restore the supply/demand balance and absorb the price shock. To do that, U.S. wheat is staying open for business around the clock. </blockquote>

[Fransisco]

Wow, what a great job the board is doing. Canadian farmers get lower than world prices and end users can't get product. Bravo, wheat board, bravo.

[Fransisco]

They article makes one little mistake, an error of omission really. The open market is <b>both</b> the <b>buyers</b> and <b>sellers</b> best friend.

[wilagro]

Franny: You should be in the pretzel business as you like to twist things around.