Depape and durum

[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.

"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."

[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.

[charliep]

Some indication that Alberta farmers (some at least) are waiting
till the "B" series. The idea is to let the elevator unplug and from
there get better feedback on the grades out there and from there
ability to blend. Should also be adjustment payment by then.

Lots of feed wheat in Alberta. The farmers will also be looking for
programs here. Not crappy initial, pre commit to selling without
knowing what the CWB will take on the other side and then
waiting and finally accepting whatever the CWB offers on delivery
commitment/payments.

Implication - the CWB will have 100 % acceptance on everything.

[mbratrud]

We have seen several guys hold for the B Series as well. Especially where Durum is concerned. Some folks are wanting to monitor the CWB price performance on Durum before they sign up.

[mcfarms]

Yup thats what we are doing. waiting and watching, no point to sign up unless cash flow is needed, oh thats true there is no cash flow. More of a cash trickle.

[charliep]

The area of better relationship between delivery opportunity and pricing is something that needs to be highlighted with director candidates.

I note the CWB has made specific changes in some of the pools.

Separated feed barley into 2 pooling periods. Why not durum?

Almost full payment on barley with a low cost EPO. Still CWB tockage but at least can get a price on delivery.

A cash plus program for malt barley which matches delivery and pricing against specific sales the CWB has made. Have done a similar thing with soft white spring wheat to domestic mills. Why not durum?

Changes to the alternative/small class wheats to only an "A" series in some cases with GDC contracts there after or only GDC contracts. Why not go to cash pricing on alternative wheats in a single desk environment?

Still too much CWB tockage/fudge factor but they all have been steps in the right direction. Is this something the directors candidates see more of in the future? What is their opinion of the programs?