The August Pool Return Outlook has put the Canadian Wheat Board back in the running as a market for farmers holding feed barley, analysts agree.
“It’s in the ballpark now,” said United Grain Growers’ Charlie Pearson.
“Combined with some better information coming out of world markets, the PROs have made the board at least worth contemplating now.”
The August PRO for No. 1 C.W. feed barley has risen by $16 per tonne to $137-167 compared to the 1996-97 estimated pool return of $151 per tonne.
Read Also
British Columbia farmers to receive increased AgriStability supports
B.C. farmers to receive bump in AgriStability compensations due to weather concerns, international trade instability
The board last week recommended to the federal government that initial payments be increased on all classes of wheat, durum, feed barley and designated barley.
Not worth the time
Some discouraged farmers reacted to July’s initial barley price by vowing to burn their crops before selling it for $1 a bushel.
That reaction didn’t surprise Shaun Wildman, a broker with Pool Commodity Trading Services, who said last month’s initial prices “weren’t in line with reality.”
“What most analysts in the business said about initials is to disregard that,” Wildman said. “Don’t be paranoid about it.”
Feed barley is selling for $2.15 per bushel on the open market compared to an earlier 97 cents, he said.
Producers who need cash flow now should be able to lock in fairly good prices.
“It’s mainly just a matter of what your cash flow needs are and your philosophy of dealing with the board,” Wildman said.
Increased barley consumption and “considerably higher prices” could come later this crop year.
Wildman advises farmers suffering a cash flow crunch to sell oilseeds now, not feed grains.
“My advice is to be holders of feed grains rather than dumping at whatever the market will offer you,” Wildman said.
If producers can afford to store their crop until later in the year, they might “more than benefit” from a demand-led rally, he said.
“The cash price for barley is $2 per bushel in some spots in Manitoba but I wouldn’t be surprised to see that price 50 cents higher by spring.”
Pearson said a sharp increase could be prompted by a coming Saudi Arabian tender for 5.3 million tonnes forecast by the United States Department of Agriculture.
“(Barley prices) could go $10 higher to $135 (U.S.) with this Saudi business coming up,” he said.
Farmers selling to the board should price 15-20 percent on the A-series contract, Pearson advised.
“If you hold off and hold off, the opportunities with this Saudi tender this winter might not necessarily present themselves in spring and summer.”
Boost risk level
When the board raises its initial price for barley it might consider boosting the risk level, he said. July’s barley initials were 70 percent of the PRO compared to 75 percent for wheat and 80 percent for malting barley, he said.
Taking 80 percent of the barley PRO would bring initials to $120 compared to $95 today.
