Is the Video Working! You bet your ASS it is!

[jdepape]

chuckChuck:

Remember – one thing at a time. Let’s make sure we don’t get scattered.

The $6.65 premium is exactly as reported by the CWB in its Annual Report – no misrepresentation as you suggest.

The “premiums” reported by the CWB have been reported in the Annual Reports since 05-06. They are defined as follows:
“Net per-tonne price spread realized by the CWB compared to competitors’ values”. They are not “calculated after administration and marketing costs” as you think.

The “premiums” over the last four years reported in wheat are:
05-06 (page 40) 8.66
06-07 (page 45) 6.00
07-08 (page 45) 13.81
08-09 (page 45) 6.65

On durum, the “premiums” reported are:
05-06 (page 40) 5.98
06-07 (page 45) 7.77
07-08 (page 45) 48.84
08-09 (page 45) 15.37

The CWB costs are reported in the Federal Grain Monitor Data Tables (2008-09) on page 5A-10B.

When you combine the “premiums” and the “CWB costs”, the weighted average result is a loss of $1.16/tonne on wheat and $8.86/tonne on durum.
<b>On a net basis, your “premiums” are negative.
The total dollar amount of both wheat and durum over the last four years is a reduction in revenue of $208,867,657.</b>

Will you accept this now?

Assuming you accept this, I’ll venture into another topic you’ve thrown out.
Since you still want to talk about comparing to US weighted average prices, this needs to be said:
1. The USDA data includes all grades delivered and sold. Comparing it to a single Canadian grade will mislead you.
2. The USDA data only includes spot sales; it does not include sales made on deferred delivery contracts. Many US farmers pre-sell up to half their crop after seeding but before harvest – and do very well by it. IF you could include these sales in your weightings, the weighted average price over the years would go up substantially.


By the way, have you ever driven a BMW? The way they drive is one reason people buy them. Quality and workmanship too. Another is snob appeal. The premium people pay for them has nothing to do with the dealer.

[bucket]

chuckles

In feb 09 the american farmer was locking in prices for fall delivery for 7.00usd a bushel.

The cwb continued to lower the PRO in the months following, so the prices would match their incompetent sales. Meanwhile the american farmer delivered in september ALL of his contract for the feb 09 price. Western canadian farmers could deliver only what the cwb accepted and are still waiting for payment.

If you had a lentil contract it would be delivered. You would be paid for what you contracted and delivered. Quite different from the cwb. If a farmer wanted to deliver 8cent lentil someone would have bought them.

If you wanted to deliver to the cwb you were paying a fine over THEIR acceptance levels.

You just don't get it, do you?

[bucket]

chuckles

What PRO do you use to seed a crop - September's?

The PRO stayed up until it was too late to change seeding plans.

Are you saying the PRO's are useless as well? Turning anticwb are you?

The PROs have no place in marketing as they have no contractual obligations. The cwb can say whatever they want with PRO's and not one farmer can tie a contract to it.

[bucket]

Chuckchuck/forestgump

Would you like to explain canpotex for us or are you still eating that box of chocolates?

[chuckChuck]

Jdepape,
I will get back to you with my response on CWB premiums vs costs.

But you didn't answer all my questions.

What advantage does the higher domestic usage give to American farmers and their prices?

Also why not look at the costs and profit margins in the open market to compare performance? How are farmers to make informed decisions if they can't see how the open market performs?

A few years ago when the lentil market was crappy, your colleague in grain marketing and consulting (Marlene Boersch) provided evidence that Canadian pulse exporters were undercutting each other in the international marketplace just to get handling /processing fees and market share in an over built industry.

What are your thoughts on that John?

Why is the open market not always working efficiently for special crops?

Doesn't matter whether it is Ford or BMW. Ford doesn't have a monopoly on trucks either but we know that trucks and suvs were a huge profit maker for them. Is Ford better than GM or Toyota? I guess that depends on who you are talking to.

[bucket]

chuckchuck

You do realize that the US buys grain from the cwb and then are able to export their poorer quality around the world, currently at a premium to the cwb?

In durum, they buy our product so they can access the higher quality pasta markets like Japan.

Unfortunately, the cwb never allowed a pasta plant to be built, so the US did it and buys our durum. Its called a value added business. the US just buys durum, pretty simpple compared to a canadian that has to re buy something they already own.

BTW, on the canpotex thing, do you think that mosaic buys back its product to sell into the US????

Trucks come up with feed wheat to terra and reload with potash or nitrogen, and back to the US.

[chuckChuck]

Bucket,
What was the US market for Durum indicating at the same time? Why not just use US market indicators if you don't trust the PRO?

[bucket]

chuckles

The point being the US market was also positive on durum BUT they could sign a contract for that price at the time. Farmers couldn't get close to 7bucks USD in feb 09.

If a western canadian farmers could sign a contract for durum based on the PROs, there is a pretty good chance the cwb would gain some support. But when they put out a PRO and lower it continually and then only accept one third of the 09 production that is incompetence. AND someone at the cwb should have been taken to task on that.

[jdepape]

In the interests of “informed debate” I will venture into your discussion topics, assuming in good faith that you will get back to me on CWB premiums vs costs. But before I do, one more thing to think about on premiums, from a previous post:

The other way to look at it is to look at the price the CWB got in comparison to "the market" over the crop year. I can’t speak for you, but if I’m going to hire someone to market my grain for me, I expect them to get me better than average prices. When you compare the final pool return to whatever relevant market you want, it is lower than the crop year average for the crop year. In fact, if you compare CWB farmgate returns to US prices over a crop year, in most years the CWB pool return is lower than the lowest US price of the year and never is it much higher than the lowest US price.

<b>The US farmer can sell his whole crop at the lowest price of the year and still get a better price than you through the CWB.</b>

chuckChuck: your thoughts on this please.


Your questions:
“What advantage does the higher domestic usage give to American farmers and their prices?”

Let’s assume for a minute that you are right that American farmgate wheat prices are higher because of a higher domestic usage proportion (at least I think that’s where you were going with this). The US also exports wheat, as you know. And to the same “lower value” destinations that Canada does: Bangladesh, Indonesia, China, El Salvador, etc.

If, as you say, the US has higher prices to farmers because of a large domestic market, at what price do these other destinations pay for US wheat? Do they pay as much as the domestic market - or something less? I’m going to guess that your answer would be they pay less.

The CWB has always said that multiple sellers would push prices down to the lowest market value. What you are saying is that doesn’t happen in the US.

Can you explain how your theory and the CWB’s don’t match?

Next question:
"Also why not look at the costs and profit margins in the open market to compare performance?"

I’ve already done that – you must have missed it. There’s plenty of evidence that non-CWB margins are slimmer and costs charged to farmers are lower – that with the CWB.

[chuckChuck]

John I haven't forgot about you. I am still working on a response to CWB premiums vs costs.

In the mean time, I think you you are dismissing the point I am trying to make about the price advantage of the larger domestic usage in the US market.

As an example only: If a US mill pays $300 per tonne in Minneapolis and the cost of getting it there is $30 a tonne from Fargo ND the net is $270. If the same quality is sold to an off shore customer and the cost is $60 per tonne to get it there the net is $240. This is assuming that the off shore customer and the US mill are paying the same price because of competition from other suppliers.

Since the US market consumes more of its' domestic production over 50%, and Canada less < 30%. (Charlie gave the precise numbers earlier) Then Canadian farmers are putting a larger percentage of lower value returns into their pooled prices from off shore markets. #1 Is this true from your perspective?
#2 What is an approximate value advantage to US farmers of this higher domestic usage?

Your generalization about lower costs in the open market is just not always true. Making wide sweeping generalizations is always dangerous.

I pointed out earlier a glaring example of the pricing problems in an oversupplied lentil market by Marlene Boersch. What is your response?

I also noted that the basis for yellow peas in the quorum report ( I don't remember which year) was very high.

The reality is there has not been a study that has looked at performance, costs and profits in a wide range of open market crops. Please correct me if I am wrong.

I think you are being somewhat selective in your arguments.