Saudi back in feed barley market.

[charliep]

See the below press release.

DATE: March 7, 2008
Feed Barley Values for 2007-08 Pool B Increase in Mid-Month Outlook
Winnipeg -- The CWB has released a mid-month Pool Return Outlook (PRO) for the 2007-08 crop year, increasing the feed barley forecast returns by $23 per tonne to reflect recent developments in the world's largest barley import market.

Feed barley
1 CW - Pool B 275.00/tonne (Mar 7) 252.00/tonne (Feb. 28)
PRO Commentary
2007-08 crop year
Feed barley
International feed barley prices will be impacted by a March 5 decision of the government of Saudi Arabia, the world's biggest importer of barley. In order to increase barley usage and conserve wheat-flour supplies, the Saudi government increased its import subsidy for barley by 71 per cent. Saudi consumers had been using wheat flour and other grains as substitutes for feed barley, but the government's subsidy increase should restore the demand for feed barley and increase the price in global markets.


Given the current opportunities in the marketplace, farmers may wish to take advantage of a CWB Guaranteed Delivery Contract (GDC) for feed barley that assures delivery calls by a certain date for contracted tonnage. Farmers also have the choice of pricing barley committed to the GDC using an Early Payment Option or Fixed Price Contract. Sign-up for the first GDC feed barley offer is effective immediately with guaranteed 100-per cent acceptance and delivery call by May 2, 2008. The sign-up deadline is May 2, 2008 or until sufficient tonnage is committed.

[charliep]

Will be very curious on the values offered under the EPO and FPC. Why not go with a cash price on this business? Why not allow the grain companies to source with the CWB at port only? Why not a program like cashplus with high payments/a dividend in the end? With 75,000 cargoes, the CWB could almost do this on a boat by boat basis?

I have to credit the CWB with sending out a market signal early. Having said that, I have to highlight the impact of a one day change in market signals on the livestock industry and perhaps on farmers who have sold domestic feed a few days before this. I guess market signals are one day announcements.

[Zaphod]

It's amazing what happens when they actually make an export sale. A $23 jump on one Saudi sale. I guess it means there were almost no sales in the Pool B until now.

[charliep]

Should be 75,000 tonne sale size (panamax boats).

[charliep]

I am always amazed at the total disconnect between what happens in international barley markets, domestic feed markets and futures.

Pretty positive news on Friday - this announcement should have perked the market up. What happens Monday morning. Corn down. Western barley futures down.

I can even go back to early last week when traders tell me early news was available on the tenders. The CWB shared the news about the Saudis with grain companies mid (who already knew because they have contacts in the international markets). Yet no response in the market.

Only in Canada. Market signals in the international market could be litterly screaming for product and by the time this information reaches the Canadian farmer, it is a whisper to be ignored.