Thalpenny:
Item #1: On one hand, you suggest that the value of the single desk is to capture premiums (and ensuring farmers don’t compete with each other, driving the market lower). On the other hand, sometimes after an Accredited Exporter (a grain company) has negotiated an offshore sale of Canadian wheat, the CWB has been known to go around the AE and approach the customer directly offering a significantly lower price (by as much as US$5 per tonne – much more than what the AE would get out of the trade). Rather than try to take advantage of a long-standing and trusting relationship between the AE and this customer, the CWB tries to squeeze the AE out – and the farmer pays with a lower sale price. What is the advantage of doing this? What is the value of the single desk in this situation?
Item#2: Your comment: “Could there have been a more powerful message to the marketplace than having the CWB withdraw from the market this fall?”
I think you are suggesting that the CWB’s withdrawal pushed prices higher. The real issue to the grain markets was the REASON WHY the CWB withdrew. The important message was simply confirmation that the Canadian crop was bad, perhaps worse than many thought at the time.
Consider this – the CWB had quietly withdrawn from the market – no fanfare, no news release. Simply notification to customers that, for the time being, until the CWB had a better handle on the crop, it would make no new sales. I would call this prudence on the part of the CWB.
However, before things became public, buyers simply went about their business, covering their nearby needs as best they could from whatever sources they could. In fact, if we consider the full impact of the CWB’s action (or inaction if you prefer), we should include the importation of wheat into North America.
Once the news of the CWB’s withdrawal hit the media, the market took it as confirmation of a poor crop; indeed, many took it as a message that the supply situation was worse than previously thought. You said it yourself: “One of the things in a year like this that is extremely valuable information is the available supply.”
So I’m not sure why the CWB should be congratulated for withdrawing from the market while you suggest to farmers that they shouldn’t withdraw (by refusing to sign Series A contracts). Wouldn’t farmers refusing to sign contracts provide the CWB with some valuable information – such as they aren’t happy with the price the CWB is providing?
Item #3: I think you missed TOM4CWB’s point when he talked about each farmer having different needs. You seem to take this concept to explain why the single desk is superior (because farmers might sell below where the CWB would sell).
The issue of timing of sales is never discussed by the CWB when it talks about the strength of the single desk. If there are premiums the CWB captures (as it argues) they could be totally lost (and then some) if the CWB sells at the wrong time (too early or too late). The open market allows farmers to react to the market based on their individual needs and risk tolerance; the single desk, however, assumes all farmers benefit equally from equitable prices. Unfortunately, what this is saying is that the farmers who could outperform the CWB in terms of timing of sales, don’t get the opportunity. And those that need cash flow need to wait for final payments (instead of all cash up front.)
Item#4: Your comment: “This debate also highlights that there is no such thing as a dual market. Once there is no single-desk, it is gone and it is an open market, so this should be called what it is - an open market.” You say this as if it’s a bad thing.
Single desk implies monopoly – no other players – period. BUT – a dual market is possible if you define it as farmers would have 2 choices (hence, “dual”): (1) they can sell through the CWB or (2) they can sell directly to a customer (this also means through a grain company). Two choices – the CWB or not the CWB.
If you argue that the CWB can’t survive in a dual market, could this be because you see it’s only strength is the single desk? If so, you must also support the notion that the CWB’s timing on sales is really no better than anyone else's.
Item #1: On one hand, you suggest that the value of the single desk is to capture premiums (and ensuring farmers don’t compete with each other, driving the market lower). On the other hand, sometimes after an Accredited Exporter (a grain company) has negotiated an offshore sale of Canadian wheat, the CWB has been known to go around the AE and approach the customer directly offering a significantly lower price (by as much as US$5 per tonne – much more than what the AE would get out of the trade). Rather than try to take advantage of a long-standing and trusting relationship between the AE and this customer, the CWB tries to squeeze the AE out – and the farmer pays with a lower sale price. What is the advantage of doing this? What is the value of the single desk in this situation?
Item#2: Your comment: “Could there have been a more powerful message to the marketplace than having the CWB withdraw from the market this fall?”
I think you are suggesting that the CWB’s withdrawal pushed prices higher. The real issue to the grain markets was the REASON WHY the CWB withdrew. The important message was simply confirmation that the Canadian crop was bad, perhaps worse than many thought at the time.
Consider this – the CWB had quietly withdrawn from the market – no fanfare, no news release. Simply notification to customers that, for the time being, until the CWB had a better handle on the crop, it would make no new sales. I would call this prudence on the part of the CWB.
However, before things became public, buyers simply went about their business, covering their nearby needs as best they could from whatever sources they could. In fact, if we consider the full impact of the CWB’s action (or inaction if you prefer), we should include the importation of wheat into North America.
Once the news of the CWB’s withdrawal hit the media, the market took it as confirmation of a poor crop; indeed, many took it as a message that the supply situation was worse than previously thought. You said it yourself: “One of the things in a year like this that is extremely valuable information is the available supply.”
So I’m not sure why the CWB should be congratulated for withdrawing from the market while you suggest to farmers that they shouldn’t withdraw (by refusing to sign Series A contracts). Wouldn’t farmers refusing to sign contracts provide the CWB with some valuable information – such as they aren’t happy with the price the CWB is providing?
Item #3: I think you missed TOM4CWB’s point when he talked about each farmer having different needs. You seem to take this concept to explain why the single desk is superior (because farmers might sell below where the CWB would sell).
The issue of timing of sales is never discussed by the CWB when it talks about the strength of the single desk. If there are premiums the CWB captures (as it argues) they could be totally lost (and then some) if the CWB sells at the wrong time (too early or too late). The open market allows farmers to react to the market based on their individual needs and risk tolerance; the single desk, however, assumes all farmers benefit equally from equitable prices. Unfortunately, what this is saying is that the farmers who could outperform the CWB in terms of timing of sales, don’t get the opportunity. And those that need cash flow need to wait for final payments (instead of all cash up front.)
Item#4: Your comment: “This debate also highlights that there is no such thing as a dual market. Once there is no single-desk, it is gone and it is an open market, so this should be called what it is - an open market.” You say this as if it’s a bad thing.
Single desk implies monopoly – no other players – period. BUT – a dual market is possible if you define it as farmers would have 2 choices (hence, “dual”): (1) they can sell through the CWB or (2) they can sell directly to a customer (this also means through a grain company). Two choices – the CWB or not the CWB.
If you argue that the CWB can’t survive in a dual market, could this be because you see it’s only strength is the single desk? If so, you must also support the notion that the CWB’s timing on sales is really no better than anyone else's.
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