19 July 2002

Barley futures market ready to cease trading

BARLEY growers could find it hard to sell their crop forward next year, following a surprise ann-ouncement that the London Barley Futures market is to cease trading.

The London International Financial Futures and Options Exchange (LIFFE) announced last week that the contract would be de-listed from May 23 next year. It blamed the decision on low volumes being traded and follows the exchanges earlier decision to end potato futures trading in May, citing the same reason.

"This presents some major issues for the industry because it will be difficult to get transparency in the market," said Gerald Mason, chief economist at the Home-Grown Cereals Authority.

Grain merchants use the futures to hedge purchases and sales of grain against price movements, and also as an indication of forward values to calculate ex-farm prices.

"At the moment the barley market looks to be fairly well ruled by intervention," said Mr Mason. But with EC plans to further cut intervention values, forward pricing of grain could become a problem.

James Maw, barley trader for Glencore Grain, agrees. "With intervention becoming less and less meaningful, it would be useful to have the barley futures still in place.

"Im disappointed in the way LIFFE has handled it, as well as the fact theyve taken the futures away." &#42