Fusarium

[rain]

Charlie what is your spin if Alberta implements a zero tolerance on fusarium in imported grains into Alberta?

[charliep]

A project I am involved with internally so I apologize for doing the civil servant soft shoe.

Thoughts

1) No one wants to bring this disease (both feed producers and users) into Alberta and have the same problems that Manitoba and the Northern US states have. I will leave to the scientists to discuss chance of this.

2) Alberta is an importer of feed grains - this US corn/most years MB./SK. feed barley/wheat. Restricting feed access(maybe legitimately in this case) will have an impact on where cattle are fed.

I will leave for others discussion.

[rain]

Is it true there is supposed to be an official announcemnet by the end of May.

[charliep]

I haven't heard anything official on time lines. I would be supprised if it happened that quickly.

With regards to new crop business that is on the books (my understanding no US corn but likely some SK./MB. feed grains), there will have to be some process of grand fathering.

[rain]

I hope it is not SK and MB. It would make know sense whats so ever to ban intraprovincial and allow international imports. If heads are on straight the whole idea is to stop fusarium from entering the province. How can we pass restictions on provincial and not intenational. Talk about bad planning and poor foresight.
If your hunch is right.

[charliep]

Shafeek Ali, unit lead AAFRD Unit Lead Pest Management, did an interview on Call of the Land yesterday on fusarium. You can listen at

http://www.agric.gov.ab.ca/ministry/call_land/02_106.html#

[charliep]

I had better straighten out. My comment reflected my industry contacts telling me no one has forward bought new crop US corn. There is business on the books for prairie feed barley and wheat. When the rules are brought in, they will be applied the same way for both US corn and western Canadian feed grains.

The indications are May announcement with some process to allow for implementation (wouldn't happen over night).

We'll see if anyone else takes up on this thread. This was definitely a hot topic on the meeting circuit this winter.

[rain]

I am glad you got me staightend out.

My advice to any feed barley or feed wheat growers is to now waite till this announcement comes out to make any marketing decisions.

Producers with hedgeing account may want to book basis and buy a put under feed barley and feed wheat.

What do you think Charlie

[charliep]

I assume you suggestion is to not wait.

It is always hard to make a pricing rcommendation after the horse has left the barn ($10 to $12/t decline in new crop prices). Bigger acres and better yields have potential to push prices lower. Your idea on buying a put (how tradeable are they) has merit. I might play the other world and sell cash/buy a call with the thought my downside risk is maybe $10 to $15/t but upside is $20 to $30 in the case of nasty weather. Depends on strategy.

Your question on basis has me scratching my head. Before this issue, new crop basis has been an element of discussion - past 2 years delivered S. AB. $5/t over, traditionally $5/t under. Likely the extremes. Where will we be in 2002/03?

Impact on Alberta basis??? Fusarium specs. will be over and above western barley futures ones. To ensure the premium product, cash will have to pay premiums over and above normal cash - perhaps similar to delivering plump 52 lb barley to some buyers. To me, this means tighter basis in areas that can produce the zero fusarium barley and/or wider discounts in fusarium areas.

[rain]

My thoughts on basis and puts(?) is I am the only one who thinks barley acres will be down this year, based on the seeding survey I did in Feb. Pre crop insurance, pre possible fusarium legislattion, pre moisture South Central AB. Next week it will be interesting to see what Stats can has to say.

[rain]

My thoughts on basis and puts(?) is I am the only one who thinks barley acres will be down this year, based on the seeding survey I did in Feb. Pre crop insurance, pre possible fusarium legislattion, pre moisture South Central AB. Next week it will be interesting to see what Stats can has to say.

[rain]

This may be a dumb question - but does a province have legal trade authority to impose a phytosanitary restriction on interprovincial or international trade ? Wouldn't the Feds have to get involved if we were to enact a zero tolerance on fusarium coming into the province - either from other provinces or from the US ? And finally, would a zero fusarium level on feed imports help Alberta feed demand or hurt it ?

[TOM4CWB]

bep

Alberta has the right to control disease and pests within our borders, there is a question to how bad corn fusarium infection spread is because corn has been imported for half a century.

If Alberta were to restrict imports, then a large home grown market would be available for Alberta grown feed wheat and barley instead of imports from Sask and Manitoba.

Feeders in Alberta can pay a premium, however they must have the ability to buy competitively or a bankrupt feeding industry will result!

Then we won't have a feed market.

It will be interesting to see how the AB Ag dept implements this!

[TOM4CWB]

Charlie,

I don't get the market response on the feed barley Lethbridge contract falling $6.00/t on fusarium restricted movement from Sask and Manitoba.

Shouldn't feed barley prices rise if there is going to be less supply into this Lethbridge futures contract next fall???

[rain]

Tom I don't think any thing has been announced yet has it? This fusarium legilstation change is not very well known yet. 2 out of 3 feedmills in Calgary new nothing about it.

I think barley futures crashed on the stats can forecast for 8% increase in barley acres.