Why is CWB Feed Barley GDC at least $40 US per tonne cheaper than World price?

[mbratrud]

It is great to see the board has finally come out with a GDC at least reflecting a Barley price better than the domestic market. But why not higher when the world price is clearly higher?

Are they short at lower prices?

Anyone really signing up on this program?

[mbratrud]

Correction $40 CAD

[Fransisco]

That's a rhetorical question, right?

[charliep]

Just curious what feed barley prices are being offered under the GDC program. Note there is virtually no information on the CWB website except a phone number/request to call.

[URL="http://www.cwb.ca/public/en/farmers/contracts/cashplus/gpbarley/"]gdc feed barley[/URL]

[TOM4CWB]

The CWB monopoly is a buying monopoly... growers being the 'captive' suppliers who have no option but to sell to the CWB.

Buyers need not buy from the CWB... NO monopoly for them... buyers can get grain somewhere else than Canada. Besides the CWB claims you must pay the highest price from them...

Why buy from CWB when you know as a buyer you are getting less value for your money... with a good chance shipping will be messed up... also quality often questionable; from the CWB logistics!

[mbratrud]

Charlie, GDC Price Delivered Weyburn to Viterra is $2.90 per bushel. $133 per tonne. Add elevation, cleaning, freight, and inward terminal handling call it $75 - $80 (which is pretty rich for feed barley) you are at $208 - $213 instore. Indications I have heard is the the Board should be able to sell $250 Instore Vancouver or T-Bay.

[charliep]

Have another source at work but here is an article I could find easy by googling.

[URL="http://www.ft.com/cms/s/0/443d72ee-a316-11df-8cf4-00144feabdc0.html"]eu barley prices[/URL]

Will let you do the calculation for Manitoba (not sure basis) but imported US corn into Alberta will be expensive.

$4/bu corn futures. Basis into Alberta say 75 cents/bu (could be slightly more depending on volume) puts delivered Alberta track price at somewhere in the $190 to $200/tonne range.

If some people thoughts about frost come true, will be lots of feed grain. Having said, favorable weather into September/October and decent quality will make for extremely tight feed grain
supplies.

[charliep]

Link didn't work. An interesting google for those that are interested. Here is a quote from Mike Jubinville/Pro Farmer Canada (originally from Greg Kostal).


CURRENT PRICE INDICATIONS: (emphasize indications)

Feed barley price Europe: US $280/t fob port.

Feed barley price Black Sea: Nothing available.

Feed barley price Vancouver: Good luck in trying to get a commitment
from the CWB, but believe US $250/t is offered anyway.

Feed barley price landed Saudi: US $320-325/t (freight VCR to Saudi
about US $50/t).

Malt barley price landed China: US $320/t (freight VCR to China about
US $37/t).

Allow me another rant but it is frustrating the CWB can cash trade feed barley without providing the full price signal back to farmers but rather taking profit/using to deposit in the depleted PPO contingency fund.

[mbratrud]

By all means Charlie rant! I’m almost have a coronary.

[charliep]

Not a summer project but looking at the CWB annual report and feed barley is always interesting. The CWB made $1.2 mln cash trading barley in 2008/09 on 147,000 tonnes about - all deposited in the contingency fund (page 68 2008/09 annual report). Pool size (A and B) was 31,000 tonnes.

[mbratrud]

Thats .17 cents per bushel into the contingency fund. It would be interesting to compare the 08/09 final on Barley vs the average domestic feed price for that crop year?

[charliep]

Can't do for the prairies but can for Alberta.

Average A and B total payments for 2008/09 feed barley was about $190/tonne port or $130 in Alberta ($2.80/bu) assuming $60 of deductions. Simple average price delivered Red Deer elevator was $147/tonne ($3.20/bu).

[chaffmeister]

This is nuts.

The CWB has been selling feed barley for, say $50/tonne more than what it is paying farmers - and nobody's really complaining?!

Think about it for a minute -

The CWB sells at about $260/t
Then buys from farmers at about $215/t

In an open market, the export price would translate back into the prairies - instead of paying farmers $3.50 a bushel the graincos would be paying closer to $4.50/bu.

Soooo.....what do you think that would do to the local price of barley? And the price of malt barley?

The price of the whole crop would move higher. BUT, because the CWB is holding back, the price doesn't get out to the local market and the local price is held down.

Figure on 7 mmt of barley, say a conservative $25/t difference means about $175 million NOT going to barley farmers.

Great system you got there. Hows it working for you?