Viterra shares revived after the crop handler revealed estimates indicating a circa Can$200m ($196m) boost from its entry into direct wheat and barley sales, enabled by the removal of the Canadian Wheat Board's marketing stranglehold.

Viterra said it would from the last quarter of this year begin realising "modest benefits" from the market liberalisation, which will in August remove the board's 68-year-old monopoly over sales of the grains from western Canada, which produces the vast majority of the national harvest.

From 2014, Viterra forecast an increase of Can$40m-50m a year in earnings before interest, tax, depreciation and amortisation (ebitda) from the ability to handle all grades of barley and wheat, including durum.

With the group trading on a multiple of 7.5 times ebitda, on consensus analyst estimates, the extra profits imply the addition of Can$300m-375m to Viterra's capital value.

'Precision' gains

And this will come without extra investment in equipment such as silos, with the group saying it "does not expect to incur any additional growth capital expenditures to achieve this earnings benefit".

"The company expect to increase its earnings by attracting additional volumes and optimizing its operational efficiencies," Viterra said.

The group would "capture supply chain efficiencies" as it executed "with a higher degree of precision given direct relationships with the railroads and an unmatched asset network".

Viterra has already built a network from secondary handling of barley and wheat, besides direct marketing of oilseeds, pulses and grains such as oats not covered by the CWB monopoly.

'Decidedly conservative'

One cost would come from the working capital Viterra will need to buy extra crop for sale, which it estimated at about Can$150m-200m, leaving many investors to calculate the net benefit to the company of the new marketing regime at about Can$150m-200m.

National Bank Financial has calculated the net benefit to Viterra's stock price at about Can$0.40-45 per share.

And the result may prove even more given that Viterra's ebitda guidance is "decidedly conservative", BMO Capital Markets analyst Kenneth Zaslow said, forecasting that that the crop handler might achieve the $40m-50m-a-year uplift next year.

At National Bank Financial, director Robert Winslow said that Viterra may be treading a cautious path until it is more evident how the market liberalisation plays out, with rivals such as Richardson and Louis Dreyfus also keen to take former CWB business.

"Viterra is probably going to wait to see who is going to get what market share," Mr Winslow told Agrimoney.com.

Viterra shares stood 2.0% higher at Can$10.93 in lunchtime deals in Toronto, after a three-day losing streak.

New contracts

Other companies seen benefiting from the CWB reform include the Ice futures exchange, who are using the market liberalisation to launch barley, durum and milling wheat futures and options on January 23.

The first futures contracts offered for trading will spread, on a delivery basis, from October 2012 to October 2014, with December, March, May and July contracts also offered.

The US-based Minneapolis Grain Exchange has already revealed plans to accept Canadian spring wheat for delivery against its contracts.