Barley Calls

[marcel]

Any thoughts on where the barley price is headed? We're currently moving some cash barley, and I'm considering purchasing some call options to take advantage of any potential upswings. I'd appreciate any words of wisdom you're willing to share.

[brian]

My thoughts are that barley/N.American feedgrains are likely to hold in a trading range until at least seeding time. Adequate supplies/slack demand are keeping barley prices under pressure. Western barley futures options volumes are close to zero so it is very tough to get a trade done. If you want to use W. barley, you would pretty much have to go long futures. A dip into the $116 to $118/t range (May/July) would have me scratching my head here. You might look at corn calls but again I would wait for a market pull back before entering $2.20 to $2.25 basis July). Corn has potential given there doesn't seem to be much weather premium for potential problems this built into prices. I again highlight patience on this trade to get the best strike price/lowest premium possible.