wheat buddy is out.

[jdepape]

farming101

One factor keeping interest away from the Winnipeg ICE milling wheat contract is the lack of cash price reporting. Traders will refuse to enter a market for wheat futures if they don't know what the underlying cash wheat prices are. ICE has failed to provide that.

[jdepape]

All this talk about the "export basis" (which isn't a basis at all, but that's another discussion) seems to have no end.

What SHOULD the export spread be? Answer: Exactly what it is.

That's another way of saying "the market is always right".

If the price in the prairies is $4.00/bu lower than the reported price at port, it's because someone is SELLING it at that price - likely a lot of selling at that price. If you are willing to sell your wheat at $5.50/bu, no one is going to say, "I know you're willing to sell it for $5.50, but I can pay you $6.50. Let's do that instead.".

Real transactions at real prices = the REAL market.

Rather than talk about what the export spread SHOULD be - with a notion of pressing to fix it - look at the REAL issue - which is farm selling.

You want to fix the market? Fix the reasons why farms sell when it doesn't make sense -

- selling because they have to for cash flow
- selling without understanding what the market is REALLY asking for.

Farmers have more influence on price than you give yourselves credit.

[Hopalong]

Disagree about "no bid".
Wheat board used to have quota system which effectively meant no bid once quota was filled.
Cash strapped farmers turned to machinery dealers and others to take grain in trade and who disposed of at least some of it illegally.
Can see no bids working for very short term but that is about it.

[jdepape]

farming101
The way you calculate basis is not how 95% of the trade does it.

Most basis quotes take the futures in USD and converts it to a CAD cash price.

If futures are at 5.76 USD and they quote a basis of 20 under, the cash price is 5.56 CAD.

The FX is in the basis.

If they did it the way you did it would mean futures = 7.16 CAD and the quoted basis to that would be 1.60 CAD under.

I know bucket can't stand this but I can't help that.

[bucket]

Sure would be nice to price fertilizer with your formula when we have a 80 cent dollar.

[farming101]

Yes, hopefully a no bid situation would be very short term.
What is the difference between telling a farmer you can't make a deal with them at a reasonable price and telling the farmer, sure I will buy your grain, sign here, then, don't take delivery of the grain when the contract says? With no compensation?
What options does a farmer have long term? More Storage, grow less or no wheat at all, use options/hedge, find new markets on your own, producer cars. John,you are indeed correct that the worst thing farmers can do is continue to sell at lower and lower prices. The reality is all opportunities there are for holding out for a better price come with an expiry date.

[BTO_farmalll]

Dape',

God Damn YOU are a Fcking Idiot Along With Yer Grain Buyin Cronies!!!!!!! Using yer Math on Converting The Fx, Theys are Still Fcking Us!!!!!!! Where is The Money GOING!!!!!!!!!!!!!!!!

[farming101]

I realize that the Minneapolis contract is probably realistic for a farmer in Saskatchewan when you consider the exchange, contract specifications etc.(Delivery to the Minneapolis/Duluth area).
Right now there are lots of spring wheat farmers in the States that are not liking the current pricing either.

I can't understand why ICE doesn't tweak their contract till it does get some uptake. Sad.

[bucket]

Depape

If basis was reported as you suggest, maybe farmers would quit selling.

And the graincos might soon learn about the power farmers have that you talk about.

[jdepape]

bucket - are you saying farmers react to basis?

I wish.

The only reason we got to 80 under last year was because farmers ignored the basis and kept on selling.

How about the new crop canola sales we were seeing last spring - over $10/bu yes - but with a 70 under basis.

[farmaholic]

I think in the staring contest between GrainCos and Producer's, Producer's will always lose.

John, a lot of Producer's don't have the financial strength to dig in their heels. As long as the beast gets fed, there is no reason for the prices to rise, to many sellers....

If the spread between port and prairie prices is as wide a $3.00--ouch. We know from the old system that from midpoint Sask deductions were about $1.60, give them $1.75 now. That still leaves $1.25 or almost $46/tonne, or on a 50 bushel/ac. wheat crop $75/ac. Did you net $62.50/ac?

[farmaholic]

Boo boo, or on a 50 bu/ac. wheat crop $62.50/ac. Not 75, got the last part right with the $62.50 though???????

[jdepape]

"a lot of Producer's don't have the financial strength to dig in their heels"

<b>BANG ON.</b>

The problem to be fixed is not the wide export spread - that's merely a symptom.

The problem is too many farms are not capitalized well enough to market to their best ability. And many don't know how to exploit the market to their benefit.

Let's solve THAT problem and see how this market works.

[bucket]

Funny thing is some people were saying here that graincos were not making excess profit because farmers were not selling?

Now it's that farmers have kept selling which is why things are ****ed up.

If canadian producers didn't sell someone halfway around the world will and has been shown in the states after a big crop they can still count on government support.

That's how many farms in the states are well financed. That and market is more transparent.

Spring wheat in the pnw has an export basis of plus 5.90 last time I checked. Add that to mpls and you get the export price quote. That kind of basis should be encouraging deliveries. Pretty simple. Not so in Canada.

[MBgrower]

BTO, I'll tell u where the money is going. Richardsons using it to expand their oil business, tundra oil.