Online grain trading service offers avenue for buyers, sellers

Western Canada is now one open market for grain, but some companies are building smaller digital marketplaces to provide organization amidst the chaos.

They are trying to simplify the buying and selling of grain for farmers and users by providing a central location to bid and ask for grain.

“I always thought that there had to be a better way to do this,” said founder Brennan Turner, a Foam Lake, Sask., native who studied economics at Yale University.

“The deregulation of the (Canadian) Wheat Board was the right time to come in and try.”

The same attitude prompted to expand and improve its existing online forum for buying and selling grain.

“We’re trying to be a spot where producers can come and see the market,” said Kyle Sinclair, a broker and trader with Agfinity.

“Transparency is what we’re trying to represent.”

FarmLead is based in Saskatoon and Agfinity operates out of Red Deer.

The transition of Western Canada’s wheat and durum markets from CWB single desk control to an open market is not expected to result in anything as simple as the canola market, which is far less variegated.

Wheat and durum have more quality distinctions and user specifications, so sometimes matching up willing buyers and sellers is challenging.

Turner said farmers want to know not only the price that is being offered for a set specification of wheat or durum at country elevators but also what is being offered for the type and quality of grain they have in their own bins.

The online buy-and-sell services also allow users to find buyers in their region.

As well, FarmLead is compiling its own credit ratings so that farmers and grain buyers can feel comfortable with each other.

“It’s a system that’s based on accountability and integrity,” said Turner.

“We tell farmers to go and get your grain tested because if you say something’s No. 1 and it comes out as No. 2 (for the buyer), and you haven’t tested, your rating on the FarmLead marketplace theoretically could go down.”

Agfinity and FarmLead charge for deals completed through their online services, but they don’t have initial fees or charge for looking through the listings.

“Anybody can go on the site and see what’s trading” said Sinclair.

That helps create price transparency for all farmers, much more so than just by looking at futures prices or elevator bids.

“Producers can come on site and see what’s trading in their area, see what the prices that guys are looking for are, and from that they can see what the market is.”

Turner said tweeting with Australian farmers about the post-monopoly marketplace has been valuable as he has set up his service because they went through grain sales deregulation a few years before Western Canada.

Turner said he thinks farmers want to have a marketplace where they can see real bids and competing offers, see how deep the buying pool is and be able to complete deals with people to whom they can feasibly deliver.

Turner and Sinclair said the main benefit of their systems is providing that transparency.

They also hope their businesses will fill part of the void left by the wheat board’s absence because they can be reached easily through the internet.

“It’s a risk-free system,” said Turner. “You’re not losing anything by posting.”

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