A major change to the Canadian Wheat Board’s pooling system is getting a poor test run.
The grain marketing agency decided to offer two separate pools for feed barley in the 2004-05 crop year.
The first pool closes Jan. 31 and the second runs from 0. 1 to the end of the year.
The idea was to give farmers more accurate price signals and enable them to make better choices about how and when to sell feed barley through the board.
But 2004-05 has become a year when the board will get little feed barley delivered.
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“It’s going to be difficult to assess any results from this because the feed barley market is so soft,” said wheat board director Rod Flaman, a proponent of offering shorter pooling periods for all CWB grains.
“The price we can offer the farmer is not attracting much in the way of deliveries.”
As of last week, farmers had committed less than 100,000 tonnes of feed barley to the board’s Pool A through guaranteed delivery contracts.
That small volume reflects the fact that world feed barley prices are uncompetitive with local prices.
And that appears unlikely to change during the remainder of the 2004-05 marketing year.
“There is a lot of corn out there and that is the issue that is overhanging the market,” said Charlie Pearson, a grain market analyst with Alberta Agriculture. “This is likely to be a pretty small feed barley year for the board.”
The pool return outlook for Pool A is $117 a tonne, which is, after deductions for freight and handling, about $70 a tonne in Alberta. The PRO for Pool B is $111 a tonne.
By comparison, Alberta farmers delivering to a feedlot or feed mill last week saw prices in the range of $90-$97 a tonne in Vermilion, $92-$114 in Edmonton and $78-$110 in Grande Prairie.
Feed barley delivered to the elevator was fetching bids in excess of $90 a tonne south of Red Deer, slightly less in the Edmonton area and around $72 a tonne in Grande Prairie.
“That’s not much incentive to take out a contract with the board,” said Pearson.
He said the board market may be a viable alternative for farmers in areas where there is no significant local market, such as the Peace River region, but even then some farmers may prefer to sell off-board to get immediate full payment.
Despite the meager volumes of feed barley being sold through the board this year, Flaman said it’s good that farmers are getting more accurate price signals than can be provided when there is just one pool for the entire year.
He’d like the board to go even further to improve those price signals: “Two pools are good. Three or four would be even better.”
