durum

[bgmb]

farmaholic, that is not arbitrage if the market was arbitraging the price would be west coast port price minus freight and handling to your delivery point. A 20-30 cent spread would be understandable because no market if perfect.

Markets are not arbitraging because there is lack of competition/oligopolies in the grain buying and transportation industries.

[bgmb]

braveheart, you are close to the line good for you not a big deal for you. What about the guy in battleford sask or peace river alberta?

[charliep]

bgmb

So you are saying the durum markets western Canada sells into and the costs to get product to port positions is exactly the same as North Dakota? Our markets for durum remain east coast minus St. Lawrence costs for the most part or west coast minus costs. North Dakota would be US gulf price minus costs for mid quality to maybe some higher stuff. Western Canada and North Dakota go into the higher quality end North American semi lina market. If western Canada moved durum via the US Gulf, then you could likely make direct comparisons for the mid grades.

[charliep]

On your other comment, are you suggesting braveheart should give up some of their advantage because of proximity to the US border to farmers using some system like price pooling to support farmers in other parts of the prairies? Is not farmers who sell direct to the US not an advantage to other prairie farmers in that their is not shipped in the western Canadian grain handling system and therefore, not competing with everyone else for capacity?

[bucket]

If the rail system was working properly those markets would be available to most.

And at an advantage to everyone. Those that are close could truck and those farther away could use the rails. Same cost and logistically better as well.

[newguy]

Plentywood increasing capacity for grain handling. Heard they send their trucks into Canada and pick up. Think they may still be under construction though..

[charliep]

For what it is worth, of the 1.2 MMT of durum that has been exported to date (week 12), 350,000 tonnes was moved off the west coast, 34,000 tonnes out of Churchill, 287,000 tonnes out of Thunder Bay and 536,000 off the St. Lawrence.

[bucket]

And how much to the states.

[charliep]

That is a good. One of the numbers that isn't tracked very well. There is 50,000 for export other (I am assuming rail car). There is no tracking of truck movement except on the US side for all the entry requirements including homeland security. No export licenses. No reason to stop on Canadian side on the way across the border.

[Braveheart]

There are lots of US grain cos sending trucks into Canada.

Producer cars are being sent south as well. Location would still matter as CN lines on the northern prairies probably don't hook up well to the south. But freight to the west coast is a lot less than we pay.

bgmb, you won't get far or have a very good load on a Super B in ND. DOT regs don't support a full load.

That brings me to my main point. No matter what product or commodity, transportation is one of the most important parts of marketing. Understanding where grain/oilseeds need to go and the cost to get there would help us all.

For too long the CWB accounts tried to level the playing field re location. Then they got into using a freight adjustment factor. This was still not realistic but, it did leave enough of a "freight bubble" to allow grain cos to pay a trucking premium (if you asked for it).

So, just think about really. Durum is $12.00 USD in Carrington ND for top milling quality. FarmRanger reports bids of $11.00 CAD for crappy durum. I'd say advantage Canada because crappy durum hardly is what they call terminal durum in ND, and that's currently about $7.80 USD in the northern tier.

[Braveheart]

bgmb, before your envy meter gets into the red, yes we are 5 miles to a US port of entry. We don't/can't grow quality durum. Our neighbours 6 miles south grow it fence row to fence row. It didn't go well for them this year (quality).

[bucket]

I find it interesting that it is easy to sell our customers a poorer grade for more money.

They must be use to an average grade.

And why would they not build the storage to avoid some of these things?

[Braveheart]

So, when we sell something to someone, do we really need to know what they're going to do with it or how much they're going to make?

I can only be concerned with my level of revenue and how my cash inflow lines up with my cash outflow.

How does "Desiderata" go? "If you compare yourself to others you will either become vain or bitter".

[bucket]

I don't know wtf you are talking about. I am sick and tired of people talking about better varieties better this better that only to find out customers will gladly pay more for lesser quality.

[bgmb]

Braveheart, not trying to personally attack you. Just pointing out that if you are close to the line its easy to brush off the problem and just haul south. If you are 100 or 200 miles away then its a different story.

Also I am not just talking durum, look at the situation in the spring wheat market last winter.

Charlie P

I am suggesting that the local price of any commodity be it oil, potash, coal, wheat, canola, durum.... should be the export point price(world price) less freight and handling to get it into port position if the market if functioning properly with a large number of sellers AND buyers.

Yes I think the cost to get north dakota or montana durum to water or an end user would be very similar to saskatchewan or alberta durum. This raises the question, why is the market not arbitraging? What is wrong with our system?

Allow me to answer my own question. We have oligopolies in grain buying/handling and grain transportation. Due to lack of correct government regulation these oligopolies are extracting excess profits from their operations and that money is coming out of famrers pockets.