ICE barley trades for first time in six months

CNS Canada –– The long-dormant barley contracts on the ICE Futures Canada platform saw a glimmer of life on Tuesday as buyers and sellers met up to make some actual trades for the first time in six months.

Five October 2014 barley contracts changed hands at $125 per tonne, with commercial entities likely behind the activity. The last time barley saw any open interest prior to this five-lot was when the December 2013 contract went off the board.

The futures price works out to $2.72 per bushel, which is below nearby spot bids for barley across Western Canada, but would be in line with new-crop pricing in the par delivery region of eastern Saskatchewan.

“I like to see that (the barley contract) is trading, and I don’t see why it shouldn’t be trading more,” said Aaron Anderson, assistant vice-president of merchandising with Richardson International and a member of the committee that designed the contract.

Anderson described the barley contract as “functional”, noting it was structured after the much more liquid canola contract. The barley futures provided another way to manage risk, while also assuring delivery, he added.

After the Canadian grain industry dealt with unprecedented logistics problems moving grain over the past winter, some market participants may be looking at the pricing options available.

“There is a tool there that is underutilized and it’s a matter of getting people to realize how to use it,” said Anderson on the barley contract.

“What you need to make this contract work is participation,” he said, adding that the commercials will need to use the contract first before bringing in the speculators.

Following Tuesday’s close, ICE Futures Canada announced the daily price limit for barley will revert to $10 per tonne, as of Wednesday (June 11). Prior to that, price limits had not been applied due to the absence of open interest.

Milling wheat and durum contracts on Winnipeg-based ICE Futures Canada remain untraded, with those two grains last seeing any open interest in March 2013.

— Phil Franz-Warkentin writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.

 

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