September 21, 2007

 

Canada Wheat Board eyes buying cash feed barley

 

 

The Canadian Wheat Board (CWB) is looking at buying feed barley from the cash market as an alternative to its traditional sourcing method as it works to sell into red-hot export markets, a senior official said Thursday (September 20).

 

Gord Flaten, the CWB's vice-president of marketing, declined to comment directly on whether the CWB has been soliciting offers of feed barley from grain companies, but said cash buying is a tool it can use.

 

It's unusual but not unprecedented for the CWB to buy cash grain, Flaten said, adding the agency will consult farmers this winter about whether it should use the method more often to fill wheat and barley sales.

 

The farmer-run Canadian Wheat Board, one of the world's largest grain exporters, has a monopoly on sales of wheat and barley to millers, maltsters and export markets from Canada's main crop-growing region.

 

For feed barley, farmers have the choice of selling directly to feedlots or grain companies for a cash price, or contracting with the CWB for a pooled price, which is a share of all sales made within a specified time period.

 

For pooled sales, the CWB calls for farmer deliveries into the handling system when required to fill exports, but has not yet done so for the 2007/08 crop year, which began August 1.

 

Feed barley sales have been complicated this year by a failed push by the Canadian government to end the barley monopoly by regulation, which was subsequently overturned on July 31 in a court challenge by the CWB and others.

 

The government is appealing the decision.

 

In the weeks leading up to August 1, when the barley monopoly had been slated to end, Canadian grain companies sold more than 800,000 tonnes of barley, according to trade estimates, mainly to Middle Eastern buyers for October-November shipment.

 

The CWB is facilitating those sales, for which grain companies are buying feed barley directly from farmers.

 

The CWB expects strong world demand for feed barley continuing beyond November, Flaten said, as the world grapples with shrinking supplies from Europe and Australia.

 

December barley futures at the Winnipeg Commodity Exchange have climbed more than 25 percent since August 2, touching a record high of C$203.80 (US$203.43) per tonne, basis interior Saskatchewan.

 

Trade estimates of current spot prices in Saudi Arabia, the world's largest feed barley buyer, are around US$430 per tonne, cost and freight included, Flaten said.

 

Last month, the CWB told farmers it expected the pooled return for feed barley sales made in the early part of the marketing year to be C$217 per tonne, basis export position.

 

The CWB will update its pool return outlook on Sept. 27.

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