Tom
Was going to do a detailed explanation of the concepts Gord talked about would be a waste of my time - no cares. CWB debate is poliitical one and not a business one.
Gord did a good job although the examples were extremely skewed to make their point. 2007/08 was an interesting year for a whole bunch of different reasons starting with the market and the CWB risk management program they executed that year. Had they picked 2008/09 or 2009/10, the conclusions draw on durum would have been different.
On the price differentiation chart, the example is correct in that the CWB could make sales at prices indicated - was an example but the process occurs on daily to weekly basis. The CWB can do this because they have access to all wheat supplies without the discipline of having to attract wheat up the driveway/a price signal. In an open market, the CWB could not make sales at the lower of prices - they couldn't drag wheat up the driveway based on the price that would available at the elevator. They also don't have to arbitrage with other markets. Would some of the erosion of prices at the top end of the return to pool table (likely to occur) make up for the not making sales at the low priced end - good question.
The pricing pace model approved by the CWB board of directors and acted on by the CWB operations is also something not talked about but also having a impact on the level/timing of prices. I have to admit this is an interesting area that I don't fully understand. It is a performance measure in the annual report. It only applies to wheat excluding durum. Durum wheat and malt barley does not have this process. Actually didn't know this about durum. In the cases of malt barley and durum, actual returns are determined by the timing and level of actual cash sales. Timing good - farmers benefit. Timing bad - farmers endure the pain.
Waste of time - a political issue and not a business one.
Was going to do a detailed explanation of the concepts Gord talked about would be a waste of my time - no cares. CWB debate is poliitical one and not a business one.
Gord did a good job although the examples were extremely skewed to make their point. 2007/08 was an interesting year for a whole bunch of different reasons starting with the market and the CWB risk management program they executed that year. Had they picked 2008/09 or 2009/10, the conclusions draw on durum would have been different.
On the price differentiation chart, the example is correct in that the CWB could make sales at prices indicated - was an example but the process occurs on daily to weekly basis. The CWB can do this because they have access to all wheat supplies without the discipline of having to attract wheat up the driveway/a price signal. In an open market, the CWB could not make sales at the lower of prices - they couldn't drag wheat up the driveway based on the price that would available at the elevator. They also don't have to arbitrage with other markets. Would some of the erosion of prices at the top end of the return to pool table (likely to occur) make up for the not making sales at the low priced end - good question.
The pricing pace model approved by the CWB board of directors and acted on by the CWB operations is also something not talked about but also having a impact on the level/timing of prices. I have to admit this is an interesting area that I don't fully understand. It is a performance measure in the annual report. It only applies to wheat excluding durum. Durum wheat and malt barley does not have this process. Actually didn't know this about durum. In the cases of malt barley and durum, actual returns are determined by the timing and level of actual cash sales. Timing good - farmers benefit. Timing bad - farmers endure the pain.
Waste of time - a political issue and not a business one.
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