SASKATOON – Speculators have hijacked the barley futures market making it almost impossible to predict feedlot costs, says a Saskatchewan feedlot operator.
“Speculators are in there trying to steal money from each other,” said Milton Braaten, of Abbey.
“Something is truly amiss here, the end result of which is not a benefit to the industry,” Braaten wrote in his president’s report in the Saskatchewan Cattle Feeders Association newsletter.
Braaten said he’s not sure what’s causing the “wild swings in barley costs” but it makes it difficult to plan feed expenses.
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Price by contract
“Our costs are tied to that contract. The western barley contract determines the price of feed grain in the West,” he said.
The Winnipeg Commodity Exchange launched the contract in May of 1989. It was designed to reflect cash barley prices in the domestic barley market, particularly Alberta, and closely reflect the value of barley at the farmgate.
Braaten said the swings wouldn’t be happening if it were only feedlot owners and barley sellers trying to arrive at a price.
No reason for swing
“You see a lot of variance in prices with not any real apparent reason,” he said.
Al Dooley, Alberta Agriculture market analyst, thinks the barley market is not erratic, just rising.
“For so many years it’s been a buyers’ market and now it’s a sellers’ market for barley,” said Dooley of Edmonton.
For years, barley hovered around $2 per bushel. It wasn’t great for barley growers, but made it easy for feedlot owners to plan.
Dooley cited several reasons for the high prices:
- Low carryover of barley stocks from previous years.
- This year’s barley crop looks promising and most farmers are at least going to try for malt.
- U.S. corn crop estimates have dropped and some people think the corn crop yield may go even lower, meaning even fewer available livestock feed supplies.
- There is little feed wheat to temper prices.
