After two years on the sidelines, the Canadian Wheat Board is preparing to jump back into the feed barley export game this crop year.
Short crops the last two years, combined with strong domestic demand, left virtually no feed barley available for export.
Last year’s export program totalled just 10,000 tonnes, while the previous year was only slightly better at 24,000 tonnes.
But CWB president and chief executive officer Adrian Measner says that will change considerably in 2003-04.
“If I was putting a number out today, I would say in excess of 500,000 tonnes, but that is a very preliminary number,” he said.
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A reduced crop in Europe has led exporters from that region to withdraw from the market, creating good selling opportunities in the Middle East and Japan.
The board was planning to take the unusual step of issuing a mid-month revision of the Pool Return Outlook for feed barley on Aug. 12, too late for inclusion in this week’s issue.
Measner said he hopes the revised PRO will send a market signal to producers and provide them an incentive to take out a CWB delivery contract.
“We’ll hopefully be able to get an early indication from farmers if there are quantities they want us to market for them,” Measner said.
“There are some good opportunities in the export market right now and we certainly want to pursue them.”
The July 24 feed barley PRO was $125 a tonne, basis export position, which would enable a farmer to take out an early payment option that would provide an initial payment of $112.50 a tonne, based on 90 percent of the PRO.
After deductions for freight and handling, that works out to a farmgate price of about $62 a tonne in Saskatchewan and about $65 a tonne in Alberta.
Alberta Agriculture market analyst Charlie Pearson said that while there may be export demand for 500,000 tonnes, whether the board can attract that amount remains to be seen.
There is still some uncertainty about exactly how much barley will be produced in Western Canada this year, given the hot dry weather of recent weeks.
There are also a lot of unanswered questions about domestic demand, given the uncertainty in the cattle industry arising from the partially closed U.S. border.
But the key factor will be what price farmers can get from the board versus the local market.
Based on the July 24 PRO, the board’s price wasn’t going to be good enough to attract significant volumes of barley out of Alberta, he said.
“The domestic feed market all over Alberta would pay you more than that today,” Pearson said.
“I can’t see Alberta farmers being active sellers (to the board) for less than $2 a bushel,” or about $90 a tonne, he said.
Speaking before the board announced its plans to release a revised pool return outlook Aug. 12, Pearson said that if there are better prices available from the world market, then it’s incumbent on the board to send a signal through the PRO.
“Talk is cheap,” he said. “Show me the money and you’ll get the grain.”
Larry Weber of Weber Commodities Ltd. in Saskatoon said another factor that could affect the barley market is that hot dry weather could result in lots of lightweight barley, which is discounted severely by feedlots.
“That might be another area where the wheat board can maybe sell some of this light barley into the international market,” he said.
