Wheat Markets Continue Their Rally

[tmyrfield]

Charlie
A 3cwrs account fusarium and zero ergot blended with a #cwrs account ergot and no fusarium could make a 2cwrs easily

[charliep]

So you have delivered a product that is downgraded for pretty specific reasons. I also assume you have given ownership of that grain when pulled the hatch on your "B" train and were paid for it. Other than your ability to negotiate a package grade deal on everything you have in your bins, why should you have rights to participate in blending benefits which I am going to assume happens mostly at port, final destination US or a local processor? Are willing to assume the blending risk if a boat/rail car that has been blended to spec doesn't meet a commitment?

[bucket]

What if the grainco can't meet its end users specs without the blend?

This is a win win for both the grainco and the farmer.

Charliep you would rather have the grainco lose sales?

P&H got caught on some unloads. Changed their contracting on durum because of it.

[bucket]

If a train is inspected inland how does the grade change at Port. ?

[charliep]

The blended product at port falls within the CGC standards. It also meets all the criteria for the final customer including phyto sanitary specifications such as maximum ergot, mycotoxins and ocratoxins. Some export customers have extremely tight specifications around phyto sanitary issues. Others less so but they are also likely to be lowered priced markets.

Were you paid for the product you delivered based on CGC grading specifications? Do you have the ability to shop your sample around to find the best price/grade? Can you negotiate grades based with one grain company based on what you have in all your bins? What would you have the grain companies do differently than today?

I am going to be really controversial but I high end CWRS wheat will move to a malt barley selection/Wharburton model including direct contracting with farmers. I agree with others here we are likely to move away from straight grades to more quality specifications like falling number. There will be winners and loosers in this change.

Way off the topic. Wheat down this morning although MGEX seems to getting a second chance at this point. Spreads are interesting/moving around.

[furrowtickler]

Errol , Charlie - why is no one answering the simple fact that good #1 hrsw is way undervalued at the pit ? I understand all this Fus blending and frost #2, and 3 up , down whatever's is a big topic - but why is #1 hrsw so undervalued . Some of us see a problem with #1 selling for only $.50 - .75 a bus more than feed when western Canada is 'awash' in low grade wheat - and supply of #1 hrsw is about 75% less than last year this time according to the numbers Charlie pointed out .

[charliep]

Actually I don't have an answer. I will note there is extreme variability in daily bids between different grain companies. I would guess (don't know) that this would reflect the different markets each company is doing business in. Since early November, basis levels have widened out - particularly when the lower valued loonie is included. I think this is signal that short term anyway, the market place has adequate supplies booked to meet short term exports/domestic movement.

My two bits.

Sorry but it is a year you will have to work harder matching what you have in the bin with a customer needs. You have to shop your samples more and be prepared to truck farther. You may have to deal with new buyers as well.

Storage remains one of your best tools for wheat marketing. You have some time to work on the process described in the paragraph above.

Don't fall asleep at the switch in terms of pricing. Rallies like have occurred in December need to be captured. Realizing all the challenges in using a US based futures market, using MGEX futures and options are handy tools to have in your tool box. That includes using carry in the market to lock in better prices.

[wmoebis]

Charlie: 'I will note there is extreme variability in daily bids between different grain companies."

Do you get daily bids from all companies all locations? Or do you phone each elevator daily to get this info like we that are selling/looking have to do?

I would like to get this daily info if it is available.

[charliep]

Just checked some of the websites I follow for Alberta daily pricing. There is a buck a bushel spread between companies for similar grade/protein wheat.

[charliep]

Cargill, Louis Dreyfus and Westlock terminals all have posted cash prices on their website. Other companies we contact directly. As an example, no access Viterra but everyone here can get password protected access. Pioneer I don't think posts prices on line.

I suspect most of you get daily afternoon texts on your smart phone.

I also use ACPC and AWC prices.