Hard Red Spring... Whats it worth?

[TOM4CWB]

US Wheat Associates Price Report - December 27, 2010
DNS/CWRS 13.5 in US is worth $12.66/bu PNW


CWB same day = $9.05/bu FPC or $9.63/bu Flex at Vancouver Port Position.

Still missing $3/bu.



Highlights:

Wheat prices traded higher last week as ongoing dry conditions in the Great Plains continued to threaten the U.S. winter wheat crop. Russia’s consideration of extending their grain export ban and technical buying also supported prices. Futures prices reached a four and a half month high on Wednesday, with CBOT nearby prices gaining 18 cents and closing at $7.83/bu. However, a stronger dollar and China’s decision to increase interest rates pushed prices back down slightly. Overall, CBOT nearbys have gained 23 cents since December 17 and closed at $7.80/bu on Monday. KCBT nearbys gained 32 cents, closing at $8.43/bu, while MGEX nearbys closed at $8.66/bu, up 24 cents. Dry weather in Argentina pushed soybean and corn prices higher. CBOT soybean nearbys gained 74 cents since Dec. 17, closing at $13.73/bu on Monday. Corn prices gained 18 cents, to $6.15/bu.
The Russian Grain Union stated last week that it will consider extending the Russian grain export ban beyond July 1, 2011. The Union said that an extension might be necessary due to delayed fertilizer deliveries which are putting spring crops at risk. Independent analyst SovEcon estimated the 2010/11 Russian wheat crop at 41.5 MMT, a 33 percent decline from last year’s crop.
Ukraine’s State Statistic Committee estimated 2010 winter wheat planted area at 6.6 million hectares, a two percent decline from last year’s 6.7 million hectares. The agency estimated that Ukraine’s total 2010 grain sowings fell by 5.5 percent from last year’s 8.6 million hectares.
The Food and Agriculture Organization (FAO) increased their 2010/11 global wheat production forecast on Wednesday. The FAO increased their estimate by 5.0 MMT, largely due to increased yields in Australia. FAO projects 2010/11 global output at 653 MMT, 6.0 MMT greater than USDA’s current estimate of 647 MMT.
China’s central bank raised interest rates for the second time in just over two months in its efforts to curb inflation. The move sent commodity prices lower and wheat prices fell from their four and a half months highs reached last week.
The dollar was stronger again and provided downward pressure to wheat prices. The dollar reached a three-week high of 80.73 on Wednesday and closed at 80.47 on Friday, up slightly from the previous week (80.37).
Freight rates were down again this week as a large supply of vessels continues to weigh on the market. The Baltic Panamax Index closed at 1,845 last week, down from 2,037 on December 17. Maritime Research’s Grain Freight Index stood at 546.6, down three percent from a week ago and its lowest point since August 21."

[agstar77]

Well at least Mr. DePape will have more money.

[gregpet]

At least the producer has the 'choice' to pay his wage. Something he will have to earn unlike some other marketing agency, he agstar.

[gregpet]

correction *hey*

[FarmRanger]

<i>John recently established The CWB Monitor,
which provides <b>independent analysis</b> and
commentary on the performance of the Canadian
Wheat Board, from a farmer's perspective. </i>

Independent analysis...Something sorely lacking
and most welcome by those who desire
accountability for their "expropriated" production.
Congratulations Mr. DePape.

[riders2010]

How much more per bushel do you think this will mean for peas, flax, canola?

[SASKFARMER3]

I came up with the same conclusion the CWB is screwing farmers to a tune of $3.00 a bushel right now. Thats $150,000.00 right now out of my shitty crop. Hm could use it this year. But have to protect the pool at all costs and pay for CWB staff.

[bucket]

tom and sf3

If a person reads these articles and finds the cwb asking prices are over ten bucks a bushel, HOW, even if you are a board supporter,can you not assume that the cwb is stealing from us?????

[cityguy]

Also weird is the protein spreads. USWA have the PNW spreads at $1.00/bu drop when you go from 14's to 13.5 and another 50 cents from 13.5 to 13. That's compared to the CWB values which are showing a 20 cents spread between 13.5 and 13 and antoher 29 cents to 12.5 (have taken a half point protein off for the moisture equivalent).

CWB will also say that their FlexPro is a "world price" where on any given day they would price some countries at PNW equivalent (Korea at even money, Japan at a 50 cent premium to PNW, but Latin America would be at a discount to PNW becuase they have to compete against US wheat out of the Gulf which is at a $1.80/bushel discount to the PNNW - and the freight spreads aren't that wide).

It's also a question of how much do they low ball the FlexPro values on any given day relative to the "world" market.

Also - recognize that the USWA values are offers and there could be a 50 cent/bushel spread on the bid/offer side of the market.

[bucket]

cityguy

Good points but in a rising market and no available supplies for awhile, its doubtful there is much spread between bid/ask since if the buyer waits the price could be higher very quickly.

When durum was going through the roof a couple years back a director told me every time the cwb made a sale the price went up for the next customer.

Unfortunately, it was on the last 5 percent of the crop since they had given 95 percent of it away, which explains when I was hauling durum in at 8 bucks, it was 20 in the states.

[TOM4CWB]

Purely the difference between a push and pull sales system.

The CWB is set up to 'push' our wheat out. US growers are accused of wanting 'more' than world value... so the buyers must 'pull' the grain out of grain growers bins.

Kind of like what happens with organic wheat/grain sales in the 'designated area'

We have a system that is backwards... and it will not change until the principals the CWB sells on reverse.

Responsible/Transparent cash sales... create value by every sale being backed by a grower contract... or a responsible party as in the futures exchange that WILL pay... if called upon to fulfill the contract.

The CWB is a soft touch... and it makes no premium because when a push system dumps grain at the port... do not expect it is what the customer actually would pay a premium for!!!

Value for grain growers = Fair average quality grades.

The US marketing system works... because if quality is demanded... it is paid for... kernel by kernel.

[cityguy]

probably nit picking but the daily USDA reports for Great Falls 14's had a bid around $9.00, so there's something not quite right about the USWA value. USWA "basis" of $4.00 over at the PNW doesn't jive with daily milling wheat bids in the east which are about $1.80 over. That spread is too wide as the eastern versus western spreads should probably be more like 50 to 75 cents, not $2.20. One's too high, one's too low and would suspect that the $4.00 is more out of whack.

More to the point, the FlexPro at $9.66 at port less about $1.50 back to the country net's $8.16 versus Great Falls at $9.00.

Tom's right though - when the CWB is blindly given "pool" tonnes on October 31 with no clear price signal they are going to end up being price "pusher's".

Should almost have a system where only those that sign up basis contracts / flat price contracts with the CWB should be allowed to deliver off combine, and "pool" tonnes can only move after acceptance - say after January 1. There is no price discipline from the farmer to the CWB in the current system.

[bucket]

cityguy

As I understand the current basis price contracts (BPC) that you can take right now, you are taking the futures price then the basis is assigned by the cwb starting in feb 11.

They should call that a futures price contract.

You said "There is no price discipline from the farmer to the CWB in the current system."

Actually there is because the only grain the cwb has to sell is that signed up on PPOs. The pooled grain is not known until contracts are signed after september 1.

This is exactly what happened in the durum market. The cwb was selling grain they thought they had but farmers wouldn't commit the tonnes because of poor prices or they had sold it off board for more money. Then the cwb couldn't fill boats and had to go to GDCs. And the fact the cwb did not offer up incentives tells me they blew out the durum they did not have contracted from the farmers.

Who pays - farmers of course. And the cwb blames the farmers for not delivering when it was the cwb's fault for not watching off board prices that were higher than their PRO's. That in itself told farmers to sell in march - June 2010 their durum to the off board market.

Also keep in mind the cwb was selling durum they didn't have contracted to them, so the farmer does, at least in durum, tell the cwb what to do. But the cwb doesn't listen which in why there was a million dollar demurrage bill on one ship alone.

[TOM4CWB]

Bucket,

As it is now... the CWB OWNS every kernel of milling wheat and Export Feed that is grown in the 'designated area. STOP.

SO ppo contracts are not the only wheat being priced... only a Board of Directors decision on the selling pace to prevent 2011-12 CWB Sales; would stop CWB sales being made.