Why So Many Farmers Miss the Wheat Board

[agchat]

foragefarmer, what you said is so true. Farmers will never be able to work together. Some are just to knowledgable (or thing they are) than others. Only there opinion is right and is all that matters. Like I have been told before, that is why small town hockey teams have died. Its hard to find six farmers to agree and get along together.

[furrowtickler]

agchat - really ?? Small towns are disappearing because there are less farmers - take a fukin look around !!
Your neighbor that farmed 2000 ac 15 years ago is doing 6000 ac and some are doing 15-20,000....

[agchat]

furrow you are kinda like Sheldon on Big Bang, hard time figuring out sarcasm.

[tstep]

Really the grain co didn't do a very good job of logistics last year! And grain hasn't been moving at any great speed this year. The CWB had lots of changes in pricing options that were working.

[furrowtickler]

ah, quick read and 4 rum, gotcha... I wish I could get paid as much as Sheldon per episode or per post..

[Braveheart]

Pricing option? Where do you think that pricing option came from? When presented to the (CWB) board of directors as an idea, they said stuff it. The Feds TOLD them DO it. The wheat board, in usual fashion, ****ed it up, adding a ridiculous basis, and, a contingency fund that siphoned off cash faster than a a Russian mobster could have.

The pricing option did relief from compulsory pooling though which was part of the goal. The old board said dual marketing couldn't work. The pricing option proved otherwise, despite it's flaws.

[agchat]

Your not kidding furrow. If I got paid what Sheldon did, I really would not give a rats ass about who got my grain.

[mbdog]

The open market system is the best system. What I don't like is this third dimension and new definition/parameters of basis simply being thrown into the mix....with the intended/unintended distortion/line of defence/buffer for futures/options. I get there's more volatility being attached to basis, but by new definition and in todays marketing/logistic environment, basis can be anything...making futures insignificant/irrelevant and maintains controls within the system....which may/may not be the problem. What happens if wheat futures gets torpedoed from here?..conceivably basis could go to plus 100? Not good marketing environment/scenario for producers....shell game works real good for others.
I can see how this maybe works itself out through time as competition within the sector increases...will be patient.

[farmaholic]

mbdog, your shell game analogy is exactly how I see the game being played as well. It gets hard to keep track of all the moving parts(Minni futures, Forex, basis, premiums/discounts) This new marketing environment is getting old fast. I can honestly say I feel more screwed than I ever did under the old system. It too was far from perfect with a lot of unkowns...kinda like today but more stable.

[foragefarmer]

Mbdog

Your make a good point, but be careful as you are talking through to sides of your mouth.

You can't say you like the open market in one sentence and in the next sentence state you don't like the way the basis operates. I realize that you were unfortunately on the wrong side of the basis, just recently, and it left a bitter taste (which we have have been at one time or another)but you now have to live within the new wheat market reality. This is how the game will be played going forward.

[mbdog]

Forage...could be interpreted that way, but not my intent. Thought I qualified my point by saying its a function of competition, which likely/hopefully increases through time.

[charliep]

For what is worth, just looking at the historical basis charts for the 2004 to 2009 CWB fixed price contract. The basis variability over this period was any where from about $20 under (center Saskatchewan) to in excess of $80 under).

Perhaps my other comment that has gone no where is that wheat is substantially different crop in terms of basis variability/volatility for crops with futures. I heard the expression. Corn is corn. Soybeans are soybeans. One grade. Same here in western Canada with barley and canola.

Wheat is not wheat. Wheat has multiple grains, quality, protein and other attributes that vary with weather in the growing season and other factors. The deliverable grade on US futures markets reflects a very basic wheat quality. Your basis reflects how the market is valuing quality characturistics. You can add in the US markets include currency, a larger domestic market, etc. that are not the same in Canada.

Never does any good/ignored but I will put the link in for Montana basis levels. They vary a lot as well. Impact in the US is they are more likely to do forward pricing with other crops/leave wheat unpriced.

[URL="http://wbc.agr.mt.gov/wbc/Producers/Pricing.html"]Great Falls[/URL]

All these issues existed in the single desk days. Farmers didn't have to deal with them/they were hidden in the pooling process.

[blackpowder]

Charlie. Yuuuup.

[mbdog]

Charlie...funny..I was at a few grainco meetings and they say wheat is wheat
Whatever, doesn't matter.
My point was directed towards the new definition/rules regarding basis. I'll use it cause you sited it...5 year basis range of 100$...this I can buy...my point is 150$ in 4 months. Hope that doesn't happen very often.
Not arguing with anyone, just pointing it out and leaving it there.

[charliep]

Perhaps the fact we went into an inverse/premium market on the December MGEX in the delivery month is telling. The spring wheat market is different today than six months ago. Hear you. My only comment is to try to find supply chain partners that are at the front end of taking advantage of the changes.