looking for durum burning stove furnace

[mbratrud]

At risk of sounding like a Board hugger, we produced enough Durum this year to supply the whole World Market for Durum for the year.. On top of carryout from last year we are swimming in the stuff. So what would you do different if you were the Board?

I think this is a good signal from them, I don't want to sell all my good quality Durum for $4 a bushel! Grow less next year and wait for the price to come up just like any other small market commodity. My beef is they didnt sell more in the past 30 months, but it is what it is...

[wmoebis]

I can agree with you mb. I would rather have my bins 1/2 full of $8.00 durum than empty of $4.00 durum.

Much like fertilizer last year when price got too high market dried up, stocks rose and price dropped. We could sell at lower price or cut production and hold stocks for next price rally.

Now, if it is a true CWB marketing problem, then I think the pressure should be on accredited exporters to find these markets and prices. This would prove that the system would work without the CWB.

I don't think there would be a market for 2seconds if 200,000 lined up all the trucks we could fined and headed south. We need overseas high paying markets and someone to sell into them.

[chaffmeister]

Mbratrud:

What would I do different if I was the CWB?

First, sell grain.

But the CWB needs to understand things like spreads. Inverses in particular.

Let’s look back chronologically:

07-08 total payment for #1 durum 13 was $511.52
When the 08-09 PRO was first set (in Feb 08) it was $466 (The 07-08 PRO was $526 at the time)
When the 09-10 PRO was first set (Feb 09) it was $303 (The 08-09 PRO was $360 at the time)
The current PRO is $216.

When old crop (07-08) is $526 and new crop (08-09) is $466, that’s a $60 inverse.
When old crop (08-09) is $360 and new crop (09-10) is $303, that's a $57 inverse.

Regardless that these are forecasts and not actual market prices, they represent the CWB’s view of the markets. Since 07-08, the market has dropped $295/tonne. At just about any time during this period, old crop was a better price than new crop.

Canadian carryout:
July 31, 2008 was 819 (51% of the world carryout)
July 31 2009 was 1,897 (53% of the world)
July 31 2010 is forecast at 2,100 (66% of the world)

Stocks to use ratios (Canada vs the world)
07-08………17% vs 4%
08-09………38% vs 8%
09-10………37% vs 7%

These are ugly numbers. Canada holds back on sales because as Maureen Fitzhenry would say, they figure they’ve “got them over a barrel”. This allows the rest of the world to take advantage of the inverse and clean out its cupboards. We’re left holding a barrel-full of durum.

There are two important trading maxims that just about any trader with half a brain and a little experience knows:

1…..Inverses are made to be sold.
2…..Never, ever, ever carry grain through an inverse.

The CWB doesn’t seem to know this.

CWB marketing appears to be more political that commercial. They want to protect the pool so they back off from making more sales that might reduce the PRO (remember why they closed the malt pool last Jan?). In the last couple of years the CWB should have been doing everything it could to avoid carrying inventory (yours) through the inverse.

[silverback]

If the board, with 500 employees, can't make sales any better than a computer selling an equal amount every day of the year, then it has no value.

[Fransisco]

First off it was the boards price signals that led to the overproduction in the first place.

Secondly farmers sold a record amount of canola at record high prices while the Board decided to hold back crop. Farmers making decisions by themselves in the open market knew what to do, the board didn't and it still doesn't. They will get their pay-cheques and bonus's like nothing ever happened while durum farmers get to build bins and take out loans to cover growing costs over multiple years.

[mbratrud]

They definatly screwed up by not sellimg more... I guess the answer we will never know is had they got us to 100% sold on 08 and 09 how much preasure would that have put on prices. Maybe by dumping another 800000 MT prices would have been pushed 25% LOWER in which case I would rather have in the bin...

I guess my point is holding back this Durum is maybe on of the better things they have done. A glimmer of hope that they are actually taking their jobs seriously... Now we just need to improove the market signals they send to producers I hate Pool Return Outlooks....

Once again I will put in my plug for Single desk selling but get rid of the Pool and put a price on the Board every day!

[dmlfarmer]

Chaff: If traders know to sell and inverse, do not buyers also know to hold off buying an inverse? Is it not impossible to sell if no one is buying, and as a result prices fall to the point where demand returns?

[Zaphod]

The sooner the CWB sells this stuff, the sooner the market can recover. When they hold onto it forever, it just extends the lows in the market. The US is busy selling durum and their price is still way better than ours. If the CWB would realize how powerless they are, the better off we would be.

[chaffmeister]

Mbratrud:

CWB actions (holding back sales and issuing PROs as they did) did two things:

1…..allowed others to satisfy the demand
2…..muted the price signals so Canadian farmers overproduced

What it doesn’t do is prop up the market price.

The 08-09 PRO started at $466. This probably should have been lower but the CWB probably kept it up to avoid criticism. A year later the 08-09 PRO was $360 – over $100 lower.

Going from 07 to 08, Canadian production increased 49%
In the same time, the rest of the world increased only 6%

Interesting that different guys have different views on how they would approach the market. Something the single desk can’t accommodate.

Dmlfarmer – interesting question. Sure buyers see the inverse too. But they need to buy – you gotta keep eating. So they buy had-to-mouth – but they’re still buying. And others increased their market share while we decreased ours. Others cleaned out their cupboards while we stored more.

[mbratrud]

Chaff I Agree, as I said in my last comment there needs to be a way to improove market signals... I don't think that can happen in a pooling system.

[chaffmeister]

One of the worst inventions of the CWB EVER is the PRO.

- distorts market signals and therefore distorts markets
- the CWB manipulates the PRO to enhance its image more than to provide market signals.

[charliep]

Not to defend the CWB but the early days/prior to the producer pricing
options, the PRO had a purpose. Prior to 1992, the CWB had no method
to provide any signal of any kind the farmer (or perhaps any reason to).
The PRO, with all its flaws, did that to some extent.

In the new world, the only market signal the CWB should be providing is
a daily payment/price information. What the CWB will put in a farmers
pocket for grain delivered in the next 3 months. The price has to be
somehow related to a cash market or a shorter pooling period (no more
than 6 months) so it is fully reflective of reality.