Winnipeg Commodity Exchange Western Barley Futures At 12 Month High

Western Barley futures at the Winnipeg Commodity Exchange traded at their highest levels in twelve months during the month of April. The May futures contract closed out the month of April at $165.50 per metric tonne, which was the highest closing price for the Western Barley contract since April 2003. The increase in WCE barley prices coincides with the increase in the entire feed grains complex, as prices for WCE feed wheat and CBOT corn have also risen sharply over the course of the crop year. Reasons for the rally in feed barley prices include slow farmer selling in the country combined with strong overall demand for feed grains globally.

While prices for feed grains have risen overall, the increase in the price of WCE barley futures has lagged the increase in the prices of CBOT corn. This has resulted in the WCE western barley futures trading at a discount to CBOT corn futures in recent months, after generally trading at a premium for the better part of the last four crop years. The WCE western barley discount reached $20.00 per metric tonne in late February before recovering to close the month of April at a discount of $5.29 per metric tonne. Factors contributing to the relative discount in feed barley prices include reduced feed grain demand in western Canada due partially to the uncertainty surrounding the beef industry as a result of the BSE situation.

New crop feed barley prices have also participated in the price rally, as shown by the steady increase in the WCE October 2004 western barley futures prices. The October contract closed the month of April at a contract closing high of $165.70 per metric tonne. Trade sources suggest that reasons for the steady increase in new crop WCE barley futures prices include increasing concerns about dryness on the western prairies combined with the anticipation of a reduced number of acres being planted to barley in 2004.