First let’s look at wheat
- Open up the feed barley market immediately. According to the CWB, “Weaker values in the export market will make further international feed barley sales unlikely”. And since the CWB has been selling feed barley only on the basis of GDCs, it can be assumed it has no open sales and no inventory of feed barley. Therefore, there is no risk to the CWB to open up feed barley completely and immediately. It can do this via a number of different mechanisms – all of them simple.
- Open up the malt barley market immediately. The CWB could ensure it has coverage for all its malt barley sales and then open the market. But in its most recent PRO release, the CWB said; “Prices will remain under pressure as Australia and Argentina ramp up their export programs and the world moves towards a larger world barley crop in 2012-13.” If the CWB is short (i.e. it has sold malt barley but haven’t ensured 100% coverage), it will be able to remain very competitive in an open market for the balance of the crop year. Also, with new crop 2-row prices rumoured to be around $7.00/bu, the old crop PRO at $5.28/bu in SK will not be able to compete, creating the same scenario in malt barley as described for wheat above. The CWB will be forced to use CashPlus and there will be limited value seen in that.
- Close the wheat and durum pools early. Once the pools are closed, the CWB can either offer a short second pool until the end of the year or offer cash prices. Either way, its prices would be more relevant to the current market and therefore more competitive. They don’t necessarily need to open the market completely (although that would help too) but they will need to be showing the true value of the wheat and durum crops in the second half of 2011-12.