The CWB a Magician at work?

[TOM4CWB]

Thalpenny;

The magician is really at work...

You want it both ways, at the same time!

When I got $1.50/bu more than the CWB offered, how come the CWB gave me $12/t to $17/t, for getting more money?

Where does the CWB Act authorise this crazy situation?

NOW let us talk about premium markets for a moment.

As Vader properly pointed out, the US of A exports 2x the wheat it uses domestically.

Obviously the export market will arbitage the domestic market, as the majority of their wheat is exported.

SO I cannot get more than the world export price, when I ship to the US of A. When my product is used domestically, I displace US wheat, and push the equal amount of US wheat into the export market.

Since the US marketer is paying myself, and the US wheat grower the same value/bu, I do get a valid world price for my wheat.

The Japaneese market is part of the US export market, along with all the other countries the US ships much more to than the CWB.

So if the CWB does not have to market my wheat, and this leaves a bigger "premium" market for the CWB to fill, why should the CWB be upset if I decide not to offer my wheat to them?

ANY way this is sliced, the CWB magicians illusion does not fool me, not for a second!

People pay a premium price for premium products, because they are inherently worth more, not because a monopoly extracted a premium.

The Canola market today is a perfect example... today the price is shooting through the roof, not diving through the floor, because it is a "multi-seller" diciplined market!

[TOM4CWB]

Thalpenny;

Your statement:

“The idea of the CWB doing back to back sales and offering a cash price will undermine the pool prices. It is not possible offer pooled price versus cash price without having an impact on the pooled price.”

If it is not possible to have a pooled price operate while there is Cash Prices, why does the CWB allow PPO Basis Contracts?

Clearly the CWB states on all PPO offers, that they can be withdrawn at any time… exactly why would this not be applicable if cash prices were offered during the crop year?

What is the EPO, is it not a form of cash pricing?

On grade spreads, if the CWB offers a cash price, why wouldn’t the CWB maintain the proper spread between the classes and grades, and maintain pricing integrity? The pool takes the loss when the CWB supplies #1CWRS for a #3CWRS/CPS/CWES sale now, what is the difference?

If a cash price were offered, this transparent signal would alert the CWB if it were offering a price that was too low. If no one offers grain at the cash price the CWB has offered, obviously the CWB is NOT returning a reasonable value, signaling the CWB that it must raise the price offered to farmers.
The CWB simply then tells the consuming customer they must offer more to get the product. This is how a multi-seller system extracts a premium.

Willing….. seller, willing….. buyer, then a sales value is fair… and then completed. Isn’t the CWB’s job to facilitate this interaction in an orderly manner?

Or would there be no room for a magician in this type of a system?

[TOM4CWB]

You have now come to understand two of the principles that the Board of Directors emphasized in the creation of the payment options.

one - that the pool account will remain unaffected by the offering of the PPO's. That is one reason why the Fixed and Basis contracts are not offered past Aug 1.

two - that appropriate risk management be undertaken to insulate the pool from any market risk created by the PPO's. The EPO offering has a discount that covers the cost of ensuring there is no market gain or loss to the pool account from the use of this program. That is why the accounting is separate through a contingency account. The EPO represents a portion of the forecast return (90%) so I'd hardly call that a cash price, when the farmer is eligible for any pool account payments over the EPO value he collected.

I would argue that if there were a single desk seller of canola, a bigger pile of money could be created from the canola grown each year. Especially given the small number of major markets that we currently ship to.

I think the master illusionists here are you, parsely, kernel and eatmorewheat who perpetrate this myth that somehow the CWB is underpricing the market. But the argument of the CWB as oppresor and some kind of punitive government system does not stand the test of logic. In fact, it is the epitome of capitalism - private firms around the world would love to have a situation such as the CWB, a government granted single desk. The difference being that the profits would go to shareholders instead of to participating farmers.

There is a real avoidance to talk about the open market system and its foibles. No one could answer me a few threads ago when I quoted current elevator prices at Bottineau that were just slightly below the PRO when converted to Cdn dollars. What about basis levels on canola that range from zero to $30 over right now? With this rationalized handling system, you better hope that your elevator company has made some sales and booked the space through Vancouver wharves to ship their product. Or else you will face the BIG basis.

The example you gave of your delivery to the US probably comes from a time when the US was using EEP to artifically increase the domestic price in the US...


Tom

[bobn]

Thalpenny,

You stated"There is a real avoidance to talk about the open market system and its foibles. No one could answer me a few threads ago when I quoted current elevator prices at Bottineau that were just slightly below the PRO when converted to Cdn dollars. "

Just how can a PRO be compared to a real price? Any farmer knows that the PRO is almost worthless at the bank so why would anyone use it for comparison. It is only a guess and can be set at what ever those people at the CWB
want it to be. I look at the PRO only once or twice a year because I have found that since it's inception is has as much accuracy as a 5 day weather forecast. When it could be out by - 30% it isn't as valuable as real market prices.

[TOM4CWB]

Thalpenny;

If you had checked you would have seen my wheat sales were in 97,98 and 99... EEP has not been used since 1995.

I am still amazed that you will not admit, that the mulit-seller Canola marketing system has extracted a huge premium this year... and even Ianben can hedge over in England!

Global arbitage, world price... this is transparency!

I am waiting for the day when we are allowed to get on with our lives, cause WWII is not over on the prairies.

In 1943, the CWB stopped all trade of milling wheat grown in Western Canada.

And every time we even try to think about a WCE milling wheat contract... the CWB points us to US Wheat markets!

Hypocrasy... if our special quality is worth so much more, why does the CWB price all North American prices off MGE, KCBT CBOT.

Much needs to be done, I hope the CWB will be part of the solution in the future... instead of a problem!

[parsley]

Vader:

thalpenny refers to capitalism, but he doesn't want to say that capitalism provides equality of opportunity to every farmer wanting to market. Single desk does not. Single desk does not allow farmers to market at all.

You too, Vader, seem very eager to discuss the merits of the single desk, but you avoid the legality of the single desk.

Shortly after Rod Flaman was elected as a Director of the Canadian Wheat Board, he wrote an interesting paper called "The Monopoly is a Hoax". It is about the illegality of the single desk. Flaman is convinced, as am I, that the single desk requirement is a hoax.

QUOTE
Flaman comes to the conclusion, in his
paper, that "For 53 years Western Farmers have been tricked by the Federal government into giving up their wheat to the so called "Monopoly" while their eastern farmers reap the benefits".
UNQUOTE

Pretty strong words, and the word "tricked" is interesting, because most readers on Agri-ville would not think they have been tricked into thinking 'the single desk is the law' . I'll post some of Flaman's text on a new thread.

Parsley