Delisting still unlikely for ICE barley futures

Open interest in western barley futures on the ICE Futures Canada trading platform continues to remain virtually non-existent, but officials with the Winnipeg commodity exchange still hold out some faint hope the industry will again participate in the contract and avoid the delisting of the commodity.

“We are not currently considering delisting the western barley contract at this time,” ICE Futures Canada CEO Brad Vannan said. 

Open interest in all western barley contracts declined to zero in the first week of December 2010, when participants liquidated the remaining positions in the nearby December contract. There has since been some minor interest in the nearby March future, with open interest currently sitting at a slim two contracts.

No trades have occurred since those two contracts were positioned in the March contract in December.

There still remains hope that future efforts will be successful in reinvigorating life back into the commodity, Vannan said.

“There has certainly been a number of circumstances that were beyond ours and the trade’s control, which put a damper on the usefulness of the contract,” he said.

The downfall in open interest was tied to how western Canadian barley flows into the domestic and export market, the decline in the size of the Canadian livestock herd, the changing over to dried distillers grains (DDGs) as a feed, and the decision by producers to store excess production on farm, not in the commercial grain elevator system.

There have been all sorts of advancements in the storage of grains on farm, where previously producers would move product into the elevator system, Vannan said. The grain elevators would then place hedges into the market, creating open interest. The elevators would also roll those hedges over, depending on the situation, keeping open interest high in the futures market.

“There is also more of a hand-to-mouth buying and selling system in the barley industry for both domestic and export demand,” he said.

Efforts to gain a broader perspective of the challenges in the barley sector were ongoing, he said, with ICE Futures Canada officials attending events such as the Western Barley Growers Association convention in Calgary next week.

Market participants said the barley industry began to lose confidence in the contract quite some time ago, especially when open interest in the barley future dropped below 10,000contracts. With only two contracts open, the future is virtually unusable as a viable pricing mechanism, they said.

ICE Canada plans to be patient with the contract and hopes the trade will continue to support the commodity, Vannan said.

He also pointed out delisting a commodity is quite easy, but to re-list it once it has been removed is a very detailed and prolonged process.

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