Fran it's a mystery why farmers planted so much Durum when only 74% was accepted last year?
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Let's see. How is the CWB doing on price by holding product back? How in the world do they think that with big production in the US and North Africa, that they could possibly keep prices up? Wait a minute, they can't.
The sadly ironic thing is that the CWB export offers are just following the Minneapolis mill bids anyway. They're not leading the market, they're following. Don't forget that the CWB price is basically the same as everywhere else, Cdn farmers also have the disadvantage of higher system costs thanks to the CWB and they have to pay something else called storage and interest costs. The only groups getting rich due to CWB policy are the grain handlers and bin manufacturers.
The truth is (economics 101, don't you know) that keeping supplies inflated by forcing farmers to store the crop only extends the bottom of the market. Efficient markets (not that the CWB knows anything about that) get rid of excess production by pricing it accordingly and then the recovery can start. Don't you think that world durum buyers know that Canada is sitting on 3 million tonnes of durum? They can wait out the CWB.
Or they go elsewhere, like the US. The US is expecting to export more durum this year than they have since 2001, and they're well on their way so far this year. Again, how's the CWB doing on that front? Check the numbers.
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No, actually only about 10 or 15% of exports go to the US. But does it tell you about the CWB's selling price if they could sell it into the US and the US could turn around and sell it on the world market at a profit? Hmmm.
The US exports close to half of its durum production. That tells me that the price received by a guy in North Dakota is based on world prices. And the ND guy gets more than the CWB PRO every year. Yes, the CWB can point out the one year out of ten that they lucked into a rising market and got a decent price by sitting on their hands. I'm talking about year over year better performance in the US. The "horrible" free market has provided better prices year after year after year.
The comparison is simple to do, if you dare. Simply compare the CWB PRO for each of the last ten years to the USDA marketing year average (a true weighted average) price. This price report is on the USDA web site and reflects the average price for all grades and proteins of durum. Let me know if you need the link. The currency conversion may be a little more work but I can help you with that too if you need it. Compare the annual prices side by side and you'll see how poorly the CWB actually does. Go on, I dare you.
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What Cdn grade would be comparable? In the 2008 crop year the "average" price in North Dakota was $10.30 US/bu and in 2007 it was $11.00. DO you convert that to Cdn/mt and then compare that to the final's less mid-point saskatchewan for 2 cwads 13 just to get close to apples to apples. Is that the public benchmark that the CWB should be held accountable to? or at least one of the benchmarks. You guys are told the CWB has benchmarks but does anyone know what they are?
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Just so you don't have to do the math, here it is. The first column is the CWB final payment (PRO for 09/10). The second column is the marketing year average (a true weighted average) for all grades (good, bad and ugly) of durum in North Dakota converted to Cdn $. The last column is the difference. It shows that when prices are rallying sharply (in 2001 due to Sask drought and 07/08 when the mkt went crazy) the CWB gets better returns simply because they sell about the same amount every month, but that's not due to smarter marketing. Take a look at all the other, more normal years. How does the CWB do then? And don't give me the line about the US being a premium market. It's a fact that they export nearly half of their durum into the same markets as Canada does.
How about the last two years? Yoinks! Over the nine years shown, the average disadvantage for the Cdn farmer is $19 per tonne. If exports average 3.5 million tonnes a year, that's $66.5 million every year or nearly $600 million over the last nine years. Class action lawsuit, anyone?
2CWAD 13% ND MYA Difference
01/02 213.06 166.68 -46.38
02/03 221.45 219.82 -1.63
03/04 176.35 193.17 16.82
04/05 155.27 169.12 13.85
05/06 129.98 142.52 12.54
06/07 167.30 189.25 21.95
07/08 452.60 406.73 -45.87
08/09 299.76 443.11 143.35
09/10 149.45 210.25 60.80
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stubble
The real mystery about last year is the cwb's PRO on durum.
The marketing people that do such a good job (according to proboard people) came out with pro's that were a premium over spring wheat. The problem was that those PRO's meant nothing - the cwb is not held to those marketing signals when the cheques have to be written. Nor do they have to tell farmers in February how much they will accept in the fall.
The only other job that is comparable is being ---- you guessed it ----
A WEATHERMAN
Never see them held to account either.
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stubble the cwb does not even understand their own pro's, it is like throwing a dart at a dart board.
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