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FTSE Mondo Visione Exchanges Index:

Winnipeg Commodity Exchange Focus On Western Barley Futures

Date 10/09/2003

Western barley futures prices at the Winnipeg Commodity Exchange closed the month of August significantly higher than at the start of the month, with the October contract closing at $138.10 per tonne. Prices were volatile on heavy trading volumes, as the October contract traded in a $24.00 per tonne range. The October contract low for the month was established on August 1 at $123.50 per tonne and rose to a peak of $147.50 per tonne on August 22, before closing the month at $138.10 per tonne. The mid-month peak was the highest price the October contract traded at since early March. Trade sources suggest that factors contributing to the price volatility during August included the onset of harvest on the Canadian prairies, uncertainty surrounding the impacts of the BSE situation and fluctuations in the value of the Canadian dollar.

The rise in the price of WCE western barley futures has coincided with a general appreciation in the price of feed grains, such as the CBOT corn futures contract and international barley prices. One factor contributing to rising feed grain prices is concern that the size of the US corn crop will be smaller than earlier trade estimates due to continued hot and dry conditions throughout the Corn Belt. However, the advance of the WCE western barley futures has outpaced advances in the CBOT corn futures contract. After trading at a slight discount as recently as mid-July, the WCE western barley - CBOT corn spread peaked at over $19.00 per tonne on August 22 before narrowing at month end to under $10.00 per tonne.

Despite the recent increase, western barley futures prices are still below the levels seen at this time over the previous two years. This is in contrast to the first half of 2003 when prices were higher than either of the previous two years. This may partially be due to the fact that Statistics Canada is predicting Canadian barley production to be higher in the 2003-04 crop year than either of the previous two crop years, at 12.22 million metric tonnes. $115