By Rod Nickel

January 18, 2012 9:31 AM EST

As some of the world's biggest grain traders fan out across Canada's Prairies to compete openly for farmers' wheat and barley for the first time since World War II, they're finding more farmers like Paul Balicki than Stephen Vandervalk.

Balicki, from Saskatchewan, says he's been unimpressed with early offers to buy the spring wheat he plans to grow this year, which he's been required to sell to the Canadian Wheat Board since 1943. Like many of the region's 100,000 farmers, most of whom have no memory of a free-market system, change comes hard.

He hasn't sold a single bushel.

The single-desk system - the last remaining such grain monopoly in the world - is set to expire on August 1, after the Conservative government passed a law in December. But the new system is effectively already in place with grain handlers now scrambling to lock in forward price contracts.

"There's still some uncertainties and some variables," says Balicki. "I don't understand all of it. It's still early, and everyone wants to protect themselves."

By contrast Vandervalk, of Alberta, a longtime critic of the CWB's monopoly over the region's spring wheat, durum and barley, couldn't wait to get started. Even before sowing a single seed, he's sold most of his anticipated barley crop and more than a third of his wheat to companies like Viterra, Richardson International and Parrish & Heimbecker.

"I can lock (prices) in and that's what business is all about," said Vandervalk, president of the Grain Growers of Canada. "It's a totally different mindset. I've put more research into increasing my yield and quality of wheat in the last month than I have probably in my life."

Despite the new law throwing open the competition for prized spring wheat, durum and barley supplies in the No. 4 wheat exporter, change hasn't come quickly and farmers, grain handlers and processors are signing deals with a large amount of caution.

Foreign firms like top U.S. farm co-operative CHS Inc, just opened a Winnipeg office, and Germany's largest grain trading house, Alfred C. Toepfer International, has started to collect Prairie processing facilities.

But the wave of mergers and acquisitions that washed over Australia once it gave up its wheat monopoly in 2008 hasn't materialized in Canada, and grain contracting has been sporadic.

The limited volume of deals for western grains early in Canada's open market era, leaves farmers and grain buyers alike exposed to price risk at a time when volatility has roiled grain markets. It also means supplies may remain up for grabs until nerves calm in the industry.

Grain handlers are grappling with how to set prices that have been under monopoly control for generations and fear that the CWB might yet survive the latest effort to strip its control spring wheat, durum and malting barley, key ingredients in baking, pasta production and beer brewing respectively. Canada is the biggest exporter of all three.

"Everything is very, very uncertain and this is exactly what we were trying to avoid," said Wade Sobkowich, executive director of the Western Grain Elevators Association.

The companies now combing the countryside are counting on two things to invigorate business.

First is the outcome of a court hearing in Manitoba starting on Tuesday to decide whether the new law should be immediately suspended.

Second is the launch, on January 23, of new spring wheat, durum and barley futures contracts on the ICE Futures Canada exchange, which will give the industry better ways to set prices and hedge risk, assuming there is adequate liquidity.

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http://www.ibtimes.com/articles/283697/20120118/farmers-tiptoe-newly-opened-canada-wheat-market.htm