Impresive?

[hlg]

I believe he meant US wheat is over priced.

[Fransisco]

So if the US price dropped a buck a bushel tomorrow you think our price would stay the same as it is today?

[hlg]

No. I meant learn to read.

[cityguy]

I'm not as fluent on this written discussions as most of you but am trying to make the following points:
1) You guys are stuck with the "choice" that the CWB makes with regards to how much of your wheat/durum will be exported/used for domestic milling.
2) US farmers can choose whatever they want to do but it would appear that they effectively choose to market about half the crop and keep the rest off the market.
3) The US farmer markets enough wheat to satisfy their domestic needs (save for some Canadian milling imports and Brazilian/UK feed wheat imports) as well as a core group of export destinations.
4) The core group of export destinatinations is only allowing US wheat exports to hit about 850 -875 million bushels this past crop year which is effectively the smallest export program in 40 years (leaving aside non-drought years)
5) US market share of world wheat trade is at an all time low this year.
6) Point is that the US market isn't THE world price. It's an element of the world price but it's not as big a factor as it used to be. Chances are that an open US/Canada border or one with free buy backs that encouraged more Canadian wheat to move freely into the US would lower US values as you're adding supply to that high priced island. The question of course is that at the end of the day it's your call with your wheat for good or ill (and we're presuming that the US government wouldn't get in the way of the free flow of wheat - but that may be another topic).

Also - on test weight. The US goes with a 60 pound bushel of wheat just like we do. The one crop where it's different is oats where they use 32 pounds and for whatever reason we use 34 pounds. But wheat/corn/beans is the same both sides of the border.

[hlg]

We all know the US government wouldn`t dare try to block imports to protect domestic market!! LOL..

[Fransisco]

Okay, maybe I didn't catch the "over-priced" thing the first time round but I stand by the rest of my comments.

Yes, US exports of wheat are at an all time low. But they still export a heck of a lot of the wheat they produce. Exporting half, as citiguy says, is nothing to sneeze at. And on an absolute tonnage basis it's more than we export out of Canada.

The main point though is that the US freely allows the export and import of wheat. It is an open market, there are virtually no restrictions. Buyers and sellers are free to do their business as they please. It is not an "island" compeletly unto itself.

Citiguy you're correct that the US market is just one part of the World market and the US does not set the price of wheat for the rest of the world. However, that does not mean that the prices offered in US elevators does not reflect all of the other global factors or that they are some how insulated from the rest of the world. They simply aren't. If there were some kind of significant restrictions to trading wheat as there are in Western Canada that would be a different story. But it is an open market and therefore reasonably reflects what the world price would be back to us if we had an open market as well.

It is a pretty standard methodology when looking at a closed market like we have to compare it to the nearest open market. The OECD does it all the time in all sorts of markets. And the nearest open market to western Canada is the U.S. particularly the northern tier states.

Now the assumption that, if given the chance, prairie farmers would swamp the US with wheat thereby lowering the price everyone gets is a faulty one. There would be no measurable difference in global supply and demand. And in the end that is what matters. Wheat is traded globally, it's not just a North American product.

On top of this our traditional customers still would want our wheat and would continue to bid for it as they always have. The only difference being that they would have to pay us what they pay everyone else, to get it.

As far as farmers managing carryover goes, we successfully do it with everything else I don't see why we couldn't do it with wheat and malting barley as well. And I'd guess that our carryover of wheat would be similar to the kinds of carryovers that we now run in things like canola or oats.

[Fransisco]

What if we go to an open market and the U.S. ban's the import of all Canadian wheat? Personally I think that's a red herring. I suppose it's possible but think it's highly unlikely. They've never done it with any other grain. But so what if they did.

Europe cut our canola out of their market for a long, long time and how has that hurt us? We're growing more canola all the time and selling it to the rest of the world.

Unlike livestock, grain is very easy to ship elsewhere. And unlike flax the global wheat market is massive. It's certainly bigger than the canola. There's no shortage of people interested in buying wheat.

The movement of wheat would realign but I really don't think it would slow us down.

[chaffmeister]

Why do we still argue about whether the US would restrict wheat imports if the CWB lost its single desk on wheat?

As Fran said, they haven't done it on any other crop.

Don't lose sight of reality - the US's argument has always been about the CWB and it's single desk (monopoly). Period.

In fact, the last challenge was aimed at wheat from Western Canada (via the CWB) - it had no argument with imports from Eastern Canada.

[Fransisco]

Hey welcome back. It's been awhile.

Was beginning to think maybe the little black helicopters had come for you. LOL

[cityguy]

Think a lot of us are reading from the same book. Admit I'm not on the same page and probably back a few chapters 'cuz I don't have any skin in the game like most of you. It would be interesting as to how much wheat would go into the US in an open market. Currently it feels as though the CWB restricts spring wheat exports to the US at about 1-1.5 million tonnes and durum at 500,000. Presume they hold off on account of figuring that's the line in the sand and then the US politicians kick into gear. Presumably if the open market allowed another 50 million bushels of Canadian supply into the US then there would be a corresponding frop in US values, say 50 cents a bushel just for a number, while the "world" price (Russian/Ukraine) values may come off 15 cents. At the end of the day the "top" comes off a little bit. Still - you would have had the opportunity to sell at something significantly above the "world average" price that the PRO is supposed to represent. Could very well be in an open market we'd see Canadian wheat move to the US, depress to some degree spring wheat/durum values, corn and bean acres accelerate their move west and you end up on the cycle that oats were on where we are shpping them more oats than they grow.

[Fransisco]

"Still - you would have had the opportunity to sell at something significantly above the "world average" price that the PRO is supposed to represent."

Yes, we would.

And that's all I want is the opportunity. Not some kind of guarantee just the opportunity. If I make the right calls, they're mine. If I make the wrong calls, they're mine as well. But at the end of the day it should be my decision.

My farm, my wheat, my choice.

[chaffmeister]

In this debate about the CWB, do we really care about US and EU govt support programs, different bushel sizes, large US carry outs, new exporters such as Russia, etc, etc?

None of this matters with respect to the CWB. The CWB will not be your salvation against any of these evils.

The thing about comparing Western Canada to the US is that it is the best comparison we’ve got. Don’t be mistaken that we want to sell into the US – we just see a very attractive system, one that shows what we might have here given the opportunity.

For example – so the US carry out will be huge this year. Big deal. Why is that important in the CWB debate? The point to remember here is US farmers are reacting to market signals. THEY are reacting. THEY are doing what makes the most sense for themselves, individually. If the US govt provides some support (misguided as it is), so what? Yes, it may distort markets, but there’s F-all that the CWB can do about it for you.

If the US farmer wanted to clean out his bins and keep selling until that happens, he can do that. And if he chooses to hold onto his wheat, he can do that too. In the arguments presented about this huge carry out, I don’t see any comment about whether the farmer or the trade is carrying it. Remember, the US has huge amounts of commercial storage and a nifty little marketing tool called futures that provide carrying charges so hedgers can carry/store grain and the market pays for it. If the market signal is to carry wheat, they do it.

Here in Canada, the market provides incentives to carry canola (carrying charges) and give absolutely no incentive to carry wheat. Yet too much canola gets sold in the fall for cash flow (because we can’t sell wheat) and we carry wheat even though there is no incentive, because we’re told when to ship by the CWB.

If I’m going to pay someone to market my grain for me, he damned well better do a good job. I will look for ways to measure that performance and if he doesn’t measure up, I will fire him and find someone who will. At least I would if I could – but I don’t have that choice.