SASKATOON – Farmers who want to sell feed barley to the Canadian Wheat Board had better sign a Series B contract, says a Calgary-based market analyst.
Paul Cassidy, president of Mitcon Ltd., said the B contract, which has a sign-up deadline of Dec. 31, may represent their last chance.
If the board gets a lot of grain signed up under the Series B, he said, it may get out of the market in order to ensure the feed barley pool account doesn’t go into a deficit. The initial payment is $137 basis export position, while the latest pool return outlook is $140 to $160 a tonne.
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“Their current sales do reflect a return and at some point I believe they will protect that,” Cassidy told an agricultural outlook conference. “Their plate will be full and there will be no Series C or D.”
A board official declined to comment directly on Cassidy’s viewpoint.
“At this time it’s highly speculative to say whether there will be any acceptance of feed barley under C or D contracts,” said information officer Rhea Yates.
And she said the initial payment isn’t the determining factor in the board’s sales strategy.
“If we withdrew from the market the minute it went below the initial then it would be questionable what the value of the federal government guarantee is.”
Cassidy said if it becomes clear to the market that there will be no C or D contract, Western barley futures on the Winnipeg Commodity Exchange will no longer have the support of the board’s $137 a tonne initial payment and domestic prices will begin to drop.
With that in mind, he advised barley growers who expect to sell non-board barley later in the year to lock in current prices.
“If you have barley, you should look at forward contracting some of your production or buying a May or July put as a hedge against fall production.”
Cassidy urged all producers, but particularly those in eastern and northern Saskatchewan and northern Alberta, to commit as much feed barley as possible to the board, given current local prices. The Lethbridge cash price is about $125 to $130 a tonne for maximum 17 percent moisture, 48-pound barley.
He said despite large supplies of barley on farm, producers have resisted selling and driving down the domestic price. But eventually, there will be massive selling pressure as farmers start to see the potential for deterioration of their tough and damp barley.
