CWB News Today

[charliep]

A couple of interesting CWB items today.

1) Increase in the PRO for malt barley.

http://www.cwb.ca/en/contracts/pool_return/2002-03/091202.jsp

2) Pre-warning of initial payment increases.

http://www.cwb.ca/en/news/releases/2002/091202.jsp

Comments?

[charliep]

With apologies for being an economist/liking numbers, the adjusted initial payments lie anywhere from 68 % to 73 % of the August PRO for most classes of wheat, durum and feed barley. The outliers are feed wheat where initial payment is 60 % of the Aug. PRO and SWS which was set at 75 % of the Aug. PRO. Malt barley PRO values are set at about 80 % of the adjusted PRO (Sept. 12). These per centages are based on port prices/initial payments.

An interesting calcuation is to compare local based initial payments to expected final. Knocking off CWB costs results in an initial payment to final ratio of about 62 % to 66 % for all wheat (including durum) and feed barley. In the case of malt barley, the percentage is about 75 % of forecast total payments (again comparing local initial payments to expected final).

The recommendation remains to use the early pricing option to market all non durum wheat classes - get your money earlier rather than later. Too bad they are not available for durum/malt barley. Feed wheat/barley are not even worth mentioning in the same sentence as CWB.

[TOM4CWB]

Charlie;

The following CWB statement is truly amazing...

"In addition, to assist farmers in their marketing decisions, the CWB has reviewed the prospects for the wheat pool account and is providing an advisory with regard to expected changes in the September 26 PRO. Farmers considering the Early Payment Option (EPO) for wheat are advised that milling wheat returns may rise as much as $15-$40 per tonne by the time the next PRO is released."

If there has been a change...

Then lets see the change.... duuuuhhh

I wonder why the CWB can do a Sept. 12 PRO but not one for wheat???

CWB logic... MUDSVILLE

DOn't we deserve better?

[charliep]

Just a note the converted US wheat futures prices used in the CWB basis contract are up by Cdn $54/t in the case of MGE, $48/t with KCBT and $37/t for CBT.

This information can be found at

http://www.cwb.ca/db/contracts/ppo/ppo_prices.nsf/fixed_price/2002_index.html

[charliep]

The above increases reflect the changes between Aug. 22 and yesterday (Sept. 12) in the converted futures prices.

[TOM4CWB]

Charlie;

Since the Wheat market has now been down three days running... does this mean that the CWB finished buying back the uncovered wheat short positions on Monday... and now is selling which is really causing the market to dive???

Is this not unbelievable, that wheat could go straight up and then straight down... when bullish wheat news on stocks from the Ausies still doesn't stop the market from diving?

Isn't it just a little more than suspicious that the CWB has been the major cause of this whole wheat market move on the 3 US futures exchanges?

[charliep]

More likely just the ebbs and flows of the market. Profit taking (speculators will be banking some of gains). Also the old expression buy the rumor/sell the fact. The reason the market was going up was reports around the crop problems you mention. By the time USDA releases, it is all built into the market. No new buyers are around and a bit of spec. selling sends the market south.

[rain]

Tom if you are right about the CWB manipulating the US Futures Markets (I hope not)all the more reason to take the EPO at the end of the month if the forecasted levels come through.

If you have any wheat that is.

[rain]

Tom I hate to do this, but I have sort of an idea of what you think of the board. What if after getting out of what we think where some bad positions they had, they are buying again while wheat has lost $.50/bushel.

[chaffmeister]

Last week when the wheat markets were sky-rocketing, I took a look at the open interest in those contracts. In Chicago, the open interest was fairly static (up less than 1,000 contracts for the week); in Minneapolis, the same; I didn't check Kansas.

What this says is that there wasn't much change in relative positions. If the CWB was getting out of a short (short-covering, liquidating, whatever you want to call it), the open interest would go down - unless someone was selling to them to start a new short position. This isn't conclusive, but it doesn't support the notion that the CWB (or anyone else) was buying in a short futures position.

On why the market might go down hard this week, even with a "friendly" USDA report, charliep has it right - after a good ride up, many speculators (and farmers who look to time their sales through hedges) will look for a bullish USDA report as the last bit of positive news to sell into. It appears the bullish news was running low and traders were looking for one last piece of push in the market to sell into - trouble is, no one there to buy it.

On the floor of the WCE the traders have a saying: "One more bullish report and we'll be down the limit." Bull markets need to be fed.

My tummy tells me that fundamentals still point to higher prices - even new highs.

[TOM4CWB]

Rain,

I am concerned that the whole wheat rally was actually overdone... and that the CWB was a critical factor in creating it.

On market integrety, this could end up costing western Canadian farmers big time...

In 1996, the CWB pulled out of the market, and was one influence that caused the wheat markets to go through the roof. Then it took many years to get back down to a reasonable wheat stocks level in export countries, as everyone on the planet grew wheat.

We need a stable milling wheat price at $6.50/bu CDN, not $8.50/bu, because as the price increases, the supply will increase exponetially as higher cost producers are able grow wheat profitably.

THE CWB could be valuable to us IF they learn to become facilitators of our marketing needs, rather than believing they are the marketers themselves.

How we get the CWB to this point is a BIG problem... I don't know if enough good will exists to get there, on either side of the political divide...

AS for the CWB loosing money on trades, it happens on a regular basis, but we will never hold them accountable till there is marketing choice...

I don't mind loosing money on a hedge, as long as both sides of the sale agreed it was a fair price...

And isn't that what it should be about Rain?

The choice to make the decision when to time our grain sales?

[rain]

I don't disagree with yout Tom. My life would be much easier with out them as well.

[rain]

tom4cwb, you make lots of unsubstantiated statements. You may call it critiquing the CWB, but in many cases, you're off base.

Tom

[TOM4CWB]

Thalpenny;

The CWB can deny everything, and there is no way I can tell if you are telling the truth or covering up mistakes to save the monopoly.

It is obvious this is the reason we need marketing choice...

If large volumes of high quality grain can extract a premium, then the CWB SHOULD beat every other marketer on planet earth... and obviously I would then be a fool to do business with anyone else.

THE chalenge Thalpenny...

Prove to me that you deserve my trust and loyalty, can you, will you?