Western Barley futures on the Winnipeg Commodity Exchange (WCE) ended the month of November in the middle of a relatively narrow trading range. The December futures contract closed the month at $141.20 per tonne, after trading in a $5.00 per tonne trading range during the month of November (see Chart 1). However, this range is well off of the contract low of $115.40 per tonne established on July 16, 2003. The December contract has traded as high as $164.50 per tonne in January of this year. The December corn futures contract at the CBOT has traded between a low of $2.11US per bushel set on July 18 and a high of $2.51US per bushel set on May 15 since January of this year.
Even though Western Barley futures prices are well off of the July lows, prices are still below where they were at this point a year ago (see Chart 2). One of the reasons for the lower prices this crop year is the return to more normal production levels, with Statistics Canada forecasting Canadian barley production of over 12 million tonnes. This is considerably higher than last year's drought reduced crop of 7.5 million tonnes. Trade sources suggest other bearish factors include the strength and volatility of the Canadian dollar relative to the US dollar, a record large corn crop reported in the US, and the reduced cattle on feed numbers from last year in Alberta and Saskatchewan (as reported by Canfax). Bullish factors suggested by trade sources include fairly low visible supplies as reported by the Canadian Grain Commission in spite of the larger crop, and relatively tight supplies for coarse grains globally.
While the Western Barley futures prices have stayed in a relatively tight range, the WCE Western Barley - CBOT Corn spread has been quite volatile (see Chart 3). In recent months the futures price spread has shown Western barley futures trading at a premium to CBOT corn as high as a $26.52 on October 1, 2003, and as low as a discount of $3.27 to CBOT corn futures on July 22, 2003. The spread closed the month of November out with WCE barley at a $16.07 premium to CBOT corn. Reasons cited for the variation in the spread include currency fluctuations and volatility in the CBOT corn market.
Feed Grain Trade Records Increase From A Year Ago
Volume of trade in domestic feed wheat futures contracts rose 27.2% from the same month a year ago while western barley futures volume increased 4.3% from November 2002. There were 7,830 domestic feed wheat futures contracts and 17,768 western barley futures contracts traded during November 2003.
Crop year-to-date volume for domestic feed wheat futures ended November 6.8% higher than the levels recorded during the same period of the 2002/03 crop year, with 23,311 contracts traded. Total volume of trade for western barley futures for the crop year-todate stood at 85,942 contracts at the end of the month, representing an increase of 11.1% from the volume recorded during August to November 2002.
Oilseed futures contract volume declined during November with canola trade falling 13.9% from a year ago to 90,950 contracts.
There were 183 flaxseed futures traded during the month.
Crop year-to-date volume in canola futures totaled 484,788 contracts at the end of November and flaxseed futures volume totaled 1,043 contracts.
Total volume in options for November rose 21.2% from November 2002 and 85.2% for the crop year-to-date.
At the end of November 2003, total open interest in futures contracts was 29.4% lower than the end of November 2002 while total open interest in options contracts was 48.9%.
*Please note that volume numbers now include pit trades, Exchange for Physicals (EFP'S), Exchange for Risk (EFR's), futures deliveries and options exercises.
