CWB Barley PRO Forecasts Released

[charliep]

Pool Return Outlooks
2007-08 crop year
DATE: August 13, 2007
CWB 2007-08 Barley PROs Released
Winnipeg -- The CWB today resumed publication of its Pool Return Outlook (PRO) for designated and feed barley in the 2007-08 crop year. Barley markets have strengthened since spring 2007, with crop production problems in Europe, recent intense heat in Western Canada and the quality and quantity of the Australian barley crop still unknown. The strengthening Canadian dollar and record ocean freight rates are offsetting bullish markets.

No fixed price contract but the premiums on EPO forecasts are $16.50/$16.75 for feed/malt respectively at 100 % level, $6.25/$4.75 for 90 % and $2.25/$2.00 at 80 %.

Will continue to ask the question why the CWB charges farmers a premium to manage CWB pooling risk and yet offers the same services to maltsters for free. Will also be interested if Chaffmeister is right how the CWB covers supplies for feed barley sales done in the open market period.

Interesting. Comments.

[charliep]

The note is also worth reading. The excuses for poor performance have already started.

Note:

A large volume of western Canadian feed barley was sold by the trade in anticipation of an open market. The CWB has made arrangements with the trade to facilitate this business outside the pool account. This business is mostly for shipment in the fall, which means it will fill a significant portion of west coast export capacity and thus reduce available export capacity for further feed barley sales as well as the capacity available for additional sales of wheat, durum and malting barley in this shipping window.

[craig]

Charlie I agree that any time the Board comes out with a Pro they spend most of their coverage expalining why it isn't higher. Easy to blame someone else or something else for poor market performance. I note they are already predicting a bumper Aussie barley crop and base there Pro's on that. News I'm hearing is that Australia needs some timely rains or they could be in trouble again. The board's conservative attitude only helps depress prices. The message needs to be continually expressed. If you get your premiums then show me the money.

[winwin]

Craig;its not complicate-board is to BLOCK exports,not earn premiums.Its to keep prices low IN canada.Always has been its purpose and its structure.Always will be.

If you want premiums,you would unleash the private trade,to create and seek. just like they proved they were at the starting gates to do with barley.

[kamichel]

A large volume of western Canadian feed barley was sold by the trade in anticipation of an open market. The CWB has made arrangements with the trade to facilitate this business outside the pool account.

What does that actually mean? Does it mean farmers will still get their premium open market prices that they contracted?
Is this the new CWB? Are the PROs for real or are they artificially inflated only later to be set lower later in the crop year after farmers have contracted their grain? The extra 20 dollar per ton ocean freight charge sounds like it should hold prices down. As for the Canadian dollar I think they should take into account the US dollar index and the purchasing power of China. Should offset the Canadian dollar to US dollar in my opinion.

[craig]

Kamichel
To suggets the board would over estimate the PRO would be a first. The CWB has a good track record of under estimating on the PRO because this helps to hold down values of Fixed Price contract. Another example of the importance of making sure the Producer payment options never do better than the pool accounts.

[parsley]

An international maltster wrote me the following about malting barley:

"Canada has big commitments already to China."

Be interesting to find out what that committment is.

Parsley

[charliep]

kamichel is likely right this year. The 500,000 to 700,000 tonnes the trade sold is likely all the barley that will get exported this year with the regular feed barley pool less than 200,000 tonnes. The comment comes as much from looking at this years Canadian barley S&D as anything. Canada is tight barley again with US corn (and barley) imports the wild card. As with anything, when you are not selling you can post any price you want.

Malt barley will be the interesting one. Other than making sure the malsters get the 700,000 the CWB forward priced, no innovation or creativity is being shown on malt barley.

A number I really question is the premiums on EPOs. Don't understand why the premium on a 6 month pool (feed barley) the same as on a 12 month pool (malt barley). My options theory suggest a much lower premium on the one with less time in it. This would suggest there is equal risk and/or the CWB has most of the malt barley contract covered through sales/they expect a small malt barley pool. Am confused.

[charliep]

parsley

As chaffmeister has said in the past, it has not been the CWB policy to forward price export business. If right, this would be like putting a knife in the domestic maltsters back and twisting hard. Between a tight Canadian barley S&D, borderline (if not poor) new crop malt quality and ticked off farmers, malt barley supplies will be extremely tight/unavailable (particularly with poor market signals).

The other side though is tight world supplies this fall so quite possible the CWB would do malt barley business with China ahead of Aussie crop. Read fall movement. Again, makes the S&D tighter with the malsters in super crisis next spring.

[charliep]

Interesting thoughts so far. I wonder what the fee (or extortion fare) paid by the grain companies to facilitate the sales they were commmitted to. I have heard some where between $2-4/tonne was paid to the CWB. Now where does that money go to ? feed barley pool? or to the excalating costs of the media circus?.
Now they have worked an agreement out with the grain trade. Question for those that had private contracts to US buyers.
WHAT IS THE FEE THE CWB IS CHARGING YOU TO COMPLETE YOUR DEAL?
Think in another thread Saskfarmer had an issue when he called the CWB about the contract they had with a US buyer.

[charliep]

erik

The link to the discussion on US malt barley contracts is at:

http://www.agri-ville.com/cgi-bin/forums/viewThread.cgi?1186186791

Have asked the CWB the same question directly but no response. Is the CWB offering the equivalent of a daily price contract to offset forcing farmers to do a buy back/producer direct sale?

[craig]

Don't understand CWB logic. They are blaming low malt values on a high dollar and high ocean freight rates. This at the same time the grain trade was doing feed barley export sales at $4.00. How come the dollar and ocean freight didn't effect feed barley. Still believe malt pros were mostly impacted by early malt barley sales. So much for the great marketing proess the board has.