wheat buddy is out.

[bucket]

Machinery dealers are quick to point out the fx on new machinery. Fertilizer gets 2 conversions.

Not sure why no one can see the discrepancy. ?

[farming101]

Yes MBgrower, that is exactly what Canadian farmers need to know. What really is the difference between port prices and the primary elevator cash bid.
Many refer to this as an "export basis".

Portland bids for January Dark Northern #1 14% on Friday were $8.31 USD(10.33 CAD)
In Vancouver the price quotes are $329.87/t CAD or 8.98/bu CAD

First,why is the Vancouver price for a similar wheat much less than at Portland?

Second, why is the price the farmer receives much less than at Vancouver? The canola "export basis" is about $60.00/t CAD. Does the HRSW "Export Basis" need to be over $3 CAD per bushel to Vancouver and over $4 CAD to Portland?

I could be all wrong on these calculations but at first glance this is what many Canadian farmers see.

[bucket]

9 bucks canadian at the port should still give a midpoint sask price of over 7 bucks. And everyone is making good money.

[farming101]

Some have said that when the system is full or backed up all the buyers can do is widen basis to slow down deliveries.
Why not go "no bid"? While it may be discouraging for a producer who needs to move grain immediately for any number of reasons, going no bid is not nearly as disheartening as offering a crazy low price.
Another thing producers are missing out on is a functioning Canadian futures market for wheat. I do not know why the Winnipeg wheat contracts did not get any traction. Could it be because the commercials have greater control over the Canadian wheat market if they avoid using the new contracts?

[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.