From Agriweek
<b>Fire sale! Fantastic quality wheat at giveaway prices</b>
The Canadian Wheat Board, without actually admitting it, appears to be selling durum wheat as feed. That is probably what many durum farmers would do in the current market situation. The choice in front of sellers, including both producers and the Board, is to either sell high quality grain at whatever prices it will bring or to hold it. The sooner the durum surplus is cleared the sooner its value will return to a reasonable relationship with other wheat types. Canada holds, under the control of the Board, the great bulk of the global durum oversupply.
Halfway through the 2009-10 crop year the Wheat Board has called for delivery of just 40% of durum offered under delivery contracts and apparently does not expect to take more than another 10 to 20%.
The quality of prairie durum wheat usually averages higher than half the domestic and world markets want, need or are willing to pay for, and the Board sells some high-grade durum at low-grade prices in all but the few occasional years when there is a durum shortage. One trouble is that in the single-desk system many farmers who happen to believe in the single-desk system trust the Board to do the best that can be done, assume that the world will always need durum, and continue to seed excessive acres. Annual world durum trade is 3.0 to 3.6 million tonnes. If none at all were planted on the prairies in 2010, there would be enough Canadian carryover to supply all world trade for eight months.
A catharsis is needed in durum because of the oversupply, which was largely created by wildly excessive pool return outlooks issued by the Board during the pre-seeding seasons of 2008 and 2009. It would be much better if growers themselves made these decisions. In a free market some who need the money would sell at low prices to liquidate inventory, while others would store it until the market recovers. As it is no one has the choice. The Board will unilaterally decide when to sell at what price and the returns will be pooled so that everyone shares equally in the debacle.
<b>Fire sale! Fantastic quality wheat at giveaway prices</b>
The Canadian Wheat Board, without actually admitting it, appears to be selling durum wheat as feed. That is probably what many durum farmers would do in the current market situation. The choice in front of sellers, including both producers and the Board, is to either sell high quality grain at whatever prices it will bring or to hold it. The sooner the durum surplus is cleared the sooner its value will return to a reasonable relationship with other wheat types. Canada holds, under the control of the Board, the great bulk of the global durum oversupply.
Halfway through the 2009-10 crop year the Wheat Board has called for delivery of just 40% of durum offered under delivery contracts and apparently does not expect to take more than another 10 to 20%.
The quality of prairie durum wheat usually averages higher than half the domestic and world markets want, need or are willing to pay for, and the Board sells some high-grade durum at low-grade prices in all but the few occasional years when there is a durum shortage. One trouble is that in the single-desk system many farmers who happen to believe in the single-desk system trust the Board to do the best that can be done, assume that the world will always need durum, and continue to seed excessive acres. Annual world durum trade is 3.0 to 3.6 million tonnes. If none at all were planted on the prairies in 2010, there would be enough Canadian carryover to supply all world trade for eight months.
A catharsis is needed in durum because of the oversupply, which was largely created by wildly excessive pool return outlooks issued by the Board during the pre-seeding seasons of 2008 and 2009. It would be much better if growers themselves made these decisions. In a free market some who need the money would sell at low prices to liquidate inventory, while others would store it until the market recovers. As it is no one has the choice. The Board will unilaterally decide when to sell at what price and the returns will be pooled so that everyone shares equally in the debacle.
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