Hey Willagro...

[Fransisco]

From Fridays DePutter newsletter

Ontario growers selling 2010-crop off the combine - and lots of 2011 crop too!

In Ontario where wheat is freely traded, a lot of growers are selling 2010-crop which is coming off now.
Soft Red Winter wheat prices into an elevator is worth around at C$5.45 to $5.50 or about $200/tonne. Port delivery prices are slightly better than that.

For the current harvest of Hard Red Winter, most elevators are around $6.12/bu or $225/t to the grower. Port and end user bids are more.

Yields on this year’s Ontario Soft Red Winter crop which comprises the lion’s share of production, are 75 to 100 bu/acre. We’ve heard of lots of 100-plus bu yields. Those yields plus current prices mean profits!

Many Ontario wheat growers are also keen about contracting 2011-crop Soft Red and Hard Red winter wheat. They like the idea of taking advantage of the high deferred prices to lock in a
profit - selling the grain right off the combine in 2011. For 2011 crop some bids are in the $5.75 to $6/bu area. Hard Red Winter is around $6.50/bu or $239/tonne, paid to the grower.

[Fransisco]

And the wheat boards prices are... are...are...

[Fransisco]

from this weeks agriweek

Western wheat growers get their annual sticker shock experience

American wheat prices still may not have peaked in their historic pre-harvest rally. Between June 1 and July 25, Chicago soft red winter wheat futures for December 2010 gained 26%, Minneapolis hard red spring wheat 25% and Kansas City 22%. Prices were above $6 a bushel after a brief dip, with new contract highs on July 27. U.S. wheat futures are all substantially higher than a year ago. Last week the December future in Chicago was at $6.15 a bushel compared to $5.39 a year ago, Minneapolis $6.76 against $6.11 and Kansas City $6.30 vs. $5.63. Basis widened, so cash prices did not advance in step with the futures, but the cash wheat situation for American farmers is turning out very satisfactorily indeed.

This is midway through the harvest,the time of the year’s lowest cash prices. A straight conversion of Chicago futures to Canadian dollars per tonne puts Chicago wheat at $245, Minneapolis at $252 and Kansas City at $247. Last week cash prices in North Dakota for instant payment after all costs and charges, for dark northern spring wheat before any protein premiums, were the Canadian equivalent of $195 to $219 a tonne. The Canadian Wheat Board’s prices are headed decidedly in the opposite direction. It announced stunningly-low initial payments for the crop year starting Aug. 1. The top milling wheat grade is at $128 a tonne before elevator and freight deductions of $45 to $57. Net on delivery will be about $2 a bushel, a price right out of the 1970s. If the Board’s pool return guess of prices eventually to be received for the 2010 crop is correct, farmers will realize about $155 a tonne($4.21/bu) after adjustment and final payments for what is supposed to be the best wheat in the world. For the best durum in the world, the initial price is $119 a tonne at port or about $1.82 a bushel in the grower’s pocket. The 2010-11 pool return outlook estimate for durum is $200 a tonne before freight or under $150 after deductions.

The initial price for feed wheat, of which there could be quite a quantity in 2010, is a laughable $78 a tonne or less than $1 a bushel after deductions. The estimated final return for feed wheat is $152 a tonne($3.26/bu), or about 20% less than the cash price for U.S. corn in the northern states. The off-Board price in Saskatchewan at the elevator door is currently about $137 a tonne.

The Board’s initial and anticipated total payments for barley are higher than for wheat: two-row malting gets an initial payment of $138 a tonne before deductions and the Board supposes that it will eventually pay $214. Its initial price for feed barley at $88 a tonne less deductions is under a dollar a bushel, a price right out of the 1960s. Its estimated pool return price after deductions is about $2 a bushel. Feed barley prices in the off-Board cash market are currently about $125 in Saskatchewan and above $135 a tonne in the Alberta feedlot belt.

Initial payments are the down payment under the Board’s pooling system. As the crop year unfolds initial payments are increased and interim payments made. However in the now-ending 2009-10 crop year the initial payment for milling wheat was raised only once by only $10 and the durum payment was not increased at all. At the start of 2009-10 initial payments before deductions were $178 for milling and $183 for durum wheat. At the start of 2008-09 they were $263 and $330 respectively, with final returns of $302 and $373. The latest initial prices for Wheat Board wheat are 61 to 64% of the anticipated pool return. Historically they have been closer to 70%. Word is that federal finance officials, having regard for the government guarantees of the final payments and all other Wheat Board obligations, indicated that higher amounts would not be approved. However the difference is small considering how cheaply the Board expects to sell 2010-crop prairie wheat. There also appears to be a possibility that the Board will run a deficit in the 2009-10 durum wheat pool (paying out more to farmers than it receives from customers). In June 2009 the Board issued a pool return outlook price for 2009-10 durum of $295 a tonne. Its latest published asking price was $278 a tonne at Vancouver or St. Lawrence positions and has been lower during much of the 2009-10 crop year. Only the Board and its customers know prices exactly.

Wheat growers can take the Board’s early payment option and receive an amount related to the pool return outlook price, subject to an arbitrary penalty assessed by the Board which is three or four times greater than interest on money borrowed against the deferred payments. Interest-free government cash advances are also available, further reducing the value of this option. Growers can also sell under an assortment of basis contracts for nearly-immediate settlement in full but at prices set by the Board, not visibly determined on any public market.

With the small 2010 crop and extra expenses that most growers incurred because of the difficult spring season, these insulting prices will be the last straw.

[Fransisco]

I suppose this is all production related as well. Right? Couldn't possibly have anything to do with the monopoly.

[furrowtickler]

Willie is quitely waiting for his next $.05/bus interm pmt for last years wht crop - two months from now, rubbin his hands goin oh boy - oh boy!! I am guessing he has no clue as do most good "old" board supporters about what is realy goin on and would feel more comfortable with his heasd in the sand and telling everyone else to cover up their heads as well b/c it is just some fairy tail and NONE OF IT IS TRUE - it just can not be.

[newguy]

Most board suporters do not have computers .And they would not have a clue what is going on around the world as far as marketing.

[tipsy]

$5-600.00 per acre for growing wheat, good for my friends over east. We don't grow much wheat on our farm but it's upsetting that we have to settle for $2-300.00 per acre for the wheat we grow. BTY which is supposedly the best wheat in the world. What I find really contemptuous about this is that Harper and is band of slacker's allow this to continue.

[burnt]

I wonder how the margins compare between $500-600/ac. in the east and $200-300/ac. in the west.

[TOM4CWB]

burnt,

What was that about?

Margins, are you saying that the eastern wheat growers receive more for their wheat... because it costs more to produce?

Does that mean if it costs our family more to grow our wheat... than it costs you to grow yours... our family should get more?

Please explain...

[burnt]

Is there no such thing as an innocent question? I meant exactly what I asked.

Usually when the price/yield increases, the costs quickly follow. The first cost to rise is land cost and that's the big one.

And if you look back a couple of years, you will recall that the fertilizer companies thought they were entitled to **** the users of their product when prices rose to historical highs.

So, what is left after paying all the costs - inputs, harvesting, handling, land cost etc.?

I would think that the eastern wheat producer should be ahead but that doesn't make it necessarily so.

[furrowtickler]

Who is going to gross $300/ac on wht in the west? 40bus@ $4 is $160/ac is it not?

[burnt]

By no means am I saying that the western producer should receive less than the wheat is worth at the best market available. I certainly believe in producer controlled marketing for the best return possible.

I also believe that the eastern, dual marketing option is the best one. The pool option helps keep the private trade honest and the private trade makes the board shop for the best price available rather than the most convenient one.

[wilagro]

Sounds like the CWB is screwing you guys real good. Better look at whose running it and change it REAL FAST.

If it isn't working for you then who is it working for?

Either they change or out it goes...I am not in favour of incompetence.

[TOM4CWB]

Wilagro,

Who wants the CWB?

The Canadian Cattleman.

[The new CWB Act]sets up a situation where the proposed Board would have the motive, the tools, and the opportunity to cause damage to the industries adding value to grain on the prairies. Remove the opportunity. Keep the Canadian Wheat Board and the open market system separate. The Canadian Cattlemen's Association strongly recommends that the power to buy cash grain on the open market not be given to the Canadian Wheat Board.

Incidentally on October the 15th last year, the Saskatchewan Wheat Pool leadership made a trip to meet with cabinet ministers in Ottawa, and those were the exact same points that were made, so it is not just us."
John Prentice CCA 1998 quote from senate hearings.

Hence we are not allowed cash prices today.

So... for farmers/industry who like that the CWB locks in a CDN grain supply for them at no cost or risk...

Retired/or tipsy grain farmers who don't want to make marketing choices... and want to live off their neighbours families hard work... plus the millers/maltsters/NFU/NDP/Bloc and Liberanos.

What chance do you think... commercial grain growers have of changing all these folks minds; Wilagro?

Would you ever allow my families farm to be responsible for our own wheat marketing Wilagro?

How about forcing the CWB to be responsible when BAD marketing decisions are made???

[dalek]

Burnt and Tom, margins vary about as much in Ontario as you can imagine. I know guys getting 100 bushel wheat on land that rents for $300 who wouldn't grow wheat if they didn't think they needed it for rotation or for straw. I can grow 75-80 bushel wheat on land with an average rent this year just under $30. And everything in between. Probably costs us a bit more for planting and harvesting than you with smaller fields here, otherwise probably not a lot of difference.

Something else to keep in mind, I can usually make $40-50/acre off straw alone.