Cash and Pooled CWB prices

[Steve]

Ianben

Your question: What describes your CWB?

A Government with a very large majority of the seats occupied by arrogant politicians is the best way to describe the CWB or a bully in a schoolyard that doesn’t care what the smaller kids say.

We need change to the CWB that respects all farmers regardless where they live in Canada and don’t rob Farmer Peter to pay farmer Paul.

Steve

[parsley]

Steve,

With that comment, you're not going to be on Jean Chretien's Christmas card list either!

Parsley

[TOM4CWB]

Ianben;

Multinational #1 goes to the CWB today...

The CWB is asked for a discount price against Multinational #2...

The CWB gives #1 the cheaper price, as the #2 price looks legit...

What you say can happen without the "single desk" already can easily happen...

In fact it can get worse...

#1 can create a legit appearing lower market... because #1 is so big... and the CWB feels it has an obligation under law to give lower price to #1.

The only way to stop the price from sliding is to have "designated area" producers say no to the CWB sale... and with pooling this cannot happen.

With Canola... you should have heard our domestic Canola crushers schemeing to put Canola under the CWB...

They said it was unfair that they had to bid against the higher export premium market... where if the had the CWB to supply them... they would always get supply... at the lower price...

The open bid transparent system may not be perfect... but it sure beats letting someone else sell my grain...

We can go around in circles all day... but because the CWB does not offer cash prices transparently... they are going to loose this battle.

And I guess the CWB would rather dismantle itself... than allow itself to be subjected to ridicule over past "monopoly" theories it has stated as truth, which are in reality fabrications!

[TOM4CWB]

Charlie;

Just a question...

WHY exactly would the CWB prevent our domestic industry from bidding a good price for our high quality wheat... and consuming it inside Canada?

Would this not be the most profitable and best for everyone?

Why exactly would the CWB force our domestic wheat consumers to use substandard grain products, which will in turn create substandard milled products... completing the circle of uncompetitive products... while US processors have access to whatever they want?

Or is the CWB giving a deal on lower quality grain... so these processors can actually make money on the deal... and sell for less with a competitive advantage?

Or does a 3CWRS make just as good products as a #1CWRS... and this whole grading issue is a smoke screen for subsidising low yield fields... with high prices?

[charliep]

I don't know how to answer your questions. The millers (my understanding can buy higher quality) but they have to be prepared to pay a Japanese equivalent price (or better). Not a lot of 1/2CWRS around this year and almost all on the east side of the prairies.

You question about milling quality is also beyond my technical expertise. Flour yields are lower on 3CWRS. If damage is sprout, then falling numbers can be bad (shows up with bread that will not rise). This product does not fit needs of high quality flour markets. For the generic markets, fits the quality needs mostly (provided reasonable protein - > 12.5 % and falling number).

[TOM4CWB]

Charlie;

Is there a good reason that domestic millers should not pay Japanese prices backed off for transportation?

In the USA the domestic millers must compete with the Japanese for high quality wheat, no different that for Canola going to the CDN crushers vs. Japanese buyers. The Canadian crushers have long complained about competeing with the Japanese export market for price and supply.

What exactly is the structural difference between the Canola market and the high quality milling wheat market... and the premium the Japanese pay for either one of these products?

When I exported my wheat to NW Montana, and recieved a Seattle basis export price, was this not the basis for Japanese deliveries as well?

[charliep]

The Japanese pay Canada a premium over and above Portland prices. The premium is not a CWB benefit of single desk selling but rather the value the extra quality characturistics western Canada provides them.

Every customer has a set of quality characturistics they would like and those they are willing to pay for. Our millers don't always need Cadillac quality wheat to produce flour for customers.

[TOM4CWB]

Charlie;

As you say, the Japanese are paying Canada for quality and supply specific reasons, but are not paying more than fair market value.

The CWB is obviously over competitive, (making market share gains at a cost to "designated area" farmers) in North America, exactly where does the single desk itself extract a premium?

The US growers have a legitimate complaint, take the PPO contracts... a non-competitive basis... the pooling accouts... much room to lower prices as CWB cost is about 75% of FMV.

Exactly how is the CWB going to win this US of A battle when the complaints are legit?

[charliep]

Not sure where you are going Tom.

On bulk wheat, my experience has been that they do a good job of selling wheat at full North American value on any given day. The issues become more clouded when questions like timing of sales and how price signals are provided farmers through pooled prices.

My own thoughts are western Canada should be carefull who we have fight our battles. The issue is marketing choice. I am not so sure Canada won't be having the same problems with the US in a more open marketing situation. Eg. Country of Origin Labeling on meat. Soft wood lumber dispute.

The US has no sense of ha ha these days. I look for our neighbor to get much more protectionist over the next 5 years.

[TOM4CWB]

Charlie;

I see the North American market place as the key to value added grain production on my farm.

Canola for example... $10.00/bu locked in for next fall... minimum price locked in... 100% priced and no hedge liability... this is obviuosly a US market primarily... and the US has been a perfect gentleman with my farm and Canola production comming from Canada... same goes for high quality oats, flax, what more needs to be said?

A transparent market is all the US of A is asking for; isn't that a fair request?

[TOM4CWB]

Charlie and Lee;

If full fair transparent cash pricing were offered by the CWB, wouldn't this solve the US trade dispute... as we would know for sure on any particular day... if the CWB were stealing money from the pooling accounts to push a sale into the domestic North American market place...


And is this not the obvious reason why the CWB will not offer a cash price... cause then they would be accountable to "designated area" farmers and the US of A alike.. for doing "price discriminating" give away sales that undermine domestic and international wheat and barley prices?

Face it... the CWB chooses not to be accountable to anyone... is it any wonder it is under attack... and about to be destroyed?

[charliep]

Tom4cwb

We should maybe move this discussion ahead into the front of the thread.

I again am not so sure what you are getting at. There are two points of the issue - prices to customers (which the farmer can be if they do a buy back) and the price signals a farmer gets after all CWB sales activities have been process through the pooling process.

On the selling price to customers, my experience has been that the selling price to North American customers has been fair/reasonable based on the North American price. Milling prices (realizing this is the offer side) is posted in the Globe and Mail. There is a spread which plugs in daily US wheat futures prices and the relevant basis/location adjustments. Things wouldn't happen a whole lot different in an open market and perhaps make us subject to the same type of harassment the US is heeping on us now.

On the price signal side/pooling issue, there is no relationship between daily prices and final CWB returns - except as sales contribute to the pool results. Who should be more concerned about this process - western Canadian farmers or the US? My thoughts are the current pooling process is a negative factor to our competitiveness.