Depape and durum

[bucket]

Pretty quiet on the board supporter side?

Its amazing how quiet they become when they find out some facts.

Haven't heard from dogpatch lately as to the asking prices of durum and his initial, maybe he finally woke up.

The cwb steals our grain, there is no risk management required for that, and pays us over two years. If you look at the 08 crop of durum it could be closer to 4 years by the time you get paid for it.

And cwb people do not understand this. They say I have a funny way of doing math.

[checking]

A message to my director.

I need the CWB to finally wake up to the realization that there has to be a better way to procure my durum. It will never get it done for me by continuing to pool this particular grain.

If it is desperate, as its pleadings would indicate for #1 and #2CWAD, then offer me an up front price for my supply, and stop the BS guessing game. I will not participate in your hour of need, nor will nine of my neighbours who among us could send your boat on its way.

Are you listening? Your musings that uncontracted #4, and #5 CWAD might be released from pooling in February 2008, because farmers wouldn't deliver, was also an emergency situation that was not acted upon. Apparently, the Board is prepared to repeat the same history for supplies of #1 and #2CWAD this year

[newguy]

Hog barn bins full of durum and have started to fill a big bin in local elevator.Pigs have been eating up alot of good quality durum over the past year.

[chuckChuck]

FYI. The USDA is reporting the weighted average farmer selling price for Durum in the US for September 2010 is $5.01 per bushel.
http://www.ers.usda.gov/Data/Wheat/YBtable18.asp

The October CWB PRO for #2CWAD 13% protein after deductions in Saskatchewan is $5.55 per bushel.

[jdepape]

So, according to Bucket, Oberg asks "should we give them the despatch as well?"

I doubt Mr. Oberg knows what he's suggesting.

Ocean freight rates are set on the basis of a daily cost. When you say you need 6 days to load, the effective ocean rate you get factors those 6 days into the total costs. The more time you negotiate for, the higher the cost.

SO - when you say you need 6 days to load, guess what? You PAY for six days.

And when you use only 4 days to load, you get despatch for the two days you didn't use (but you still paid for them).

ALSO - despatch is only a PARTIAL REBATE of the charges for those days not used. Typically it's half the rate (or less).

So when you get $1 million in despatch, chances are it cost you over $2 million in freight time you didn't use. The net is a loss of over $1 million.

<b>When you get paid despatch, it has actually cost you.</b>

When the CWB reports despatch payments without considering the expense for the freight time not used, it gives an incomplete picture. <b>SHIPPERS SEE DESPATCH AS A LOSS. NO ONE SETS OUT AHEAD OF TIME TO EARN DESPATCH, BECAUSE ITS SO COSTLY. CERTAINLY NO ONE ELSE SETS OUT EARNING DESPATCH AS A CORPORATE GOAL LIKE THE CWB DOES.</B>

In 2008-09, the CWB paid out $7.6 million in demurrage. On other vessels, the CWB earned despatch of $15 million. They combined the two numbers and reported "net despatch" of $7.4 million.

But to "earn" $15 million in despatch, its safe to estimate that the CWB had negotiated excess loading times with freight costs in excess of $35 million. $35 minus $15 rebate = $20 million net paid out for loading time they didn't need.

For the complete story, you need to take demurrage plus the excess freight costs (the time not used in port but paid for) then deduct the despatch payment. In 08-09, the CWB's actual demurrage/despatch situation was likely over $40 million in losses.

<b>Over the last five years, demurrage and despatch (including the freight cost) combined would likely total more than $250 million in LOSSES. Because the CWB does not report the total despatch situation, just the gross payment, it reported a net demurrage and despatch of $26.7 million gain.</b>

With all due respect to Mr. Oberg, I doubt he understands the true nature of despatch. I wonder if others on the board do either. If they did, why would they set a goal to earn $4.5 million in despatch each year? Clearly they don't know that in reality, what they have set is a goal to lose $10 million a year.

I guess it just looks better than demurrage.

[charliep]

Just to highlight, the PRO is forecast which could go up or down. The $5.01/bu
is spot price which could go up or down for remaining sales. As the CWB
highlights you can't compare a US spot price to a pooled price. It would be fair
to compare a US spot price to an FPC - both are bankable.

Assuming the price is right and grade is right (note the US price is an average
price of all grades), I have to highlight the cash flow side. The $5.01/bu is cash
price paid on delivery with all the money available to be deposited into the bank.
A western Canadian farmer would get an initial payment of $1.60/bu SK.
elevator, hope for a adjustment of $2/bu (CWB request) and still have $2/bu that
they may wait for a year to recieve.

If cash flow was a necessity, a durum fixed price contract (2CWAD 13 protein)
signed on September 15 would net the farmer a price of $4.35/bu - 65 cents/bu
less than the US farmer. FPC on September 15 $219/tonne port. Initial
$120/tonne port. Paid after 2 weeks. $101/tonne or $2.75/bu. Add in a
$1.60/bu initial and the price is $4.35/bu for 2CWAD 13.0.

[charliep]

Way off topic but did the research to find out the average quality of the North Dakota crop
(answer the question on my mind whether the comparison of 2CWAD 13 to US durum average
price was valid). Found the following.

&quot;Quality
The average grade for this year's crop is a No. 1 Hard Amber Durum, with 70 percent of the crop
grading a No. 2 Hard Amber Durum or higher. Due to a prolonged, wet harvest, there is a wider
distribution of quality with a greater than normal share of the crop showing some reduction in
kernel quality traits and pasta processing performance. Average test weight is 60 pounds per
bushel (78.1 kg/hl), similar to the five year average. Thousand kernel weights average 40 grams,
well above average. The average protein level is similar to last year at 13.4 percent, but below
average due to strong yields. Average damage levels increased to 1.3 percent due to some
disease pressure and harvest time rains. Falling number values fell to 335 seconds compared to
398 in 2009, but nearly 80 percent of the crop is above 300 seconds. Average vitreous kernel
count is 82 percent, below the five-year average, but three-fourths of the crop is above the HAD
minimum of 75 percent.

The crop is showing higher total extractions and semolina extractions and lower than average ash
levels. Total extraction is 73.4 percent, about 3 percent higher than the five-year average and
semolina extraction is at 66.3 percent, two percent higher than average. Gluten index values are
lower than 2009 at 55 percent, but above the five-year average. Semolina mixing properties are
similar to last year and pasta quality factors are reflective of the weather impact on this year's
crop with lower color scores and reduced cooked firmness. Large carryover supplies from 2009
and the higher than average production in 2010 will provide buyers a good pool of high quality
durum to select from to produce end products that score well above the crop average.&quot;

[URL=" http://www.ndwheat.com/buyers/default.asp?ID=285"]2010 US Durum Quality[/URL]

[Fransisco]

chuckChuck do you know what grade the usda uses for their weighted average prices? Also when does their crop year start and end?

[LWeber]

Oh what a tangled web we weave
When first we practice to deceive. - Sir Walter Scott (Marmion, 1808)

Why would you compare a September to October price?

The September CWB PRO for #2CWAD 13% protein after deductions in Saskatchewan was $5.13 per bushel.

________________________________

The FPC for 1 CWAD 13.0 Durum today - November 02 is CAD$5.14 using the CWB calcs for a midpoint in SK.

The Cash price for Milling Durum today, November 02 in Fortuna, ND is CAD$7.06 a bushel.

______________________________

1) How is that market power working for you so far?


2) Why is a farmer who wants to cash out today using an FPC, taking a 41 cent per bushel reduction from the PRO. You talk about the CWB that costs pennies per bushel...On a 35 bushel crop that hit you want a farmer to take is $14.35 an acre.

3) Who pays for inept risk management?

[mbratrud]

My thoughts are 100% of everything.