Any day in April vs. August 1

[AdamSmith]

I see all the grains traded on North American markets are trading with a consistent carry from old crop to new crop. There are two (Oats and WCE W.Barley) that are trading at a discount from old crop to new crop.

With Oats it is a 24 cent/bushel discount.

But the big one is Barley which is $45.9 per tonne or $1.00 per bushel.

Could it be that the trade is not only trading the fact that barley acres will increase once that crop is freed from the tyrannical grip of the cwb, but also farmers are going to be carrying greater than normal farmer held stocks into the new crop, once barley is free. And also,

the trade is anticipating the cwb to bail out on barley altogether and that they are planning to dump all their current stocks and 2007/2008 contract commitments on the market in one day, on August 1 2007? In essence the trade expects the cwb to scuttle their own ship and they hope to inflict as much collateral damage as possible on the free market with their irresponsible dumping of barley.

And if this is the case, would it not be better for the government to free up the barley market immediately? After all the Aug 1 start of a crop year is just an arbitrary cwb date that doesn't exist anywhere else in the real world.

Any thoughts, chaffmeister or charlie, anyone else?

[charliep]

Just a reminder the contract delivery point has changed starting Oct. 2007. It is now Saskatoon versus Lethbridge.

http://www.wce.ca/ContractsMarketInfo.aspx?first=contractspecificati ons&Commodity=AB

Won't go through the math right now (off to a meeting) but Lethbridge equivalent is about $20 over the October forward futures. Will seek input if this theory reflects the reality of new crop bids. Still an inverse but not as big as indicated in your post.

[AdamSmith]

Thanks Charlie, I was unaware of the delivery point change. This still gives us a $26 discount. Not as huge as I first thought but still appears as if there are other factors afoot.

[JohnKenneth]

ag canada and most others are forecasting a sub-2mln carryout in 06/07 and a big increase in acres, due to strong malt and feed prices. if you assume normal yields, you get an improvement over last year when barley got smoked by the hot dry weather in summer. demand will be unchanged for barley, unlike the case of corn and wheat, next year vs. this year.

interesting idea, however i watch this thing closely and i can't see politics coming into it frankly.

just my 2 cents.