Barley Fixed Price Contracts Now Available

[charliep]

Just a note that the CWB has started posting fixed price contracts values for barley (malt and feed).

http://www.cwb.ca/db/contracts/ppo/ppo_prices.nsf/fixed_price/fbpc-wheat-2007-csrw-20070801.html

Under the premise "if you can't say, don't say anything at all", I will keep brief to the facts.

Malt barley is interesting (will deal with 2 row only but can apply to 6 row). The basis relative to western barley futures is $64.27/tonne over the Dec futures (Aug 15). There is a further discount (the CWB documenting the impact of existing malt barley sales on their PRO) of an additional $8.50/tonne from the adjustment factor. The end result is a port based cash price of $227.27/tonne or a $16.73/tonne discount from the PRO of $244/tonne (again port). When you sign a fixed price contract today (likely about $4/bu when you have include protein adjustment, VIP program, storage payment, etc) versus new crop open market offering of $4.50 to $4.75/bu when the promise of open market was in place.

What is this adjustment factor? Why does it get downloaded on farmers who choose to use fixed price contracts? For that matter, why not just have a cash price?

Ranting. Sorry about that.

Feed barley fixed price contract is $194.65/tonne port versus a PRO of $206/tonne. The discount is $11.35/tonne. No adjustment because the CWB has not sold any feed barley (a good thing given their track record on malt barley). If a farmer signed the fixed price contract today/delivered, the CWB could easily make a $10 to $20/tonne by simply turning around and delivering against western futures. Not sure on all the costs the CWB would face but the CWB owns your barley in store for about $140 to $145/tonne (assuming $50 to $55/tonne in CWB deductions for the Saskatoon catchment area) versus December western barley futures (Saskatoon catchment area) of $171.50/tonne. A great deal for anyone who chooses to participate in the pool. That insult after the person who used the fixed price contract has just left $11.35/tonne on the table so the CWB can manage its risk.

[charliep]

I thought it might be interesing to look at the malt barley fixed contract/basis from a year ago. Remember western barley was Lethbridge so add on an additional $20/tonne to the basis.

http://www.cwb.ca/db/contracts/ppo/ppo_prices.nsf/fixed_price/fpc-desbarley-2006-2R-20060816.html

One step forward, two steps back. And the industry wonders why no progress is being made.

[chaffmeister]

<i>While today’s ruling means the single desk remains intact for barley, Ritter says it will not be <b>“business as usual”</b>. The CWB will accelerate the evolution begun several years ago to transform the corporation into an entity that effectively responds to farmers’ business needs without sacrificing market premiums generated through the power of the single desk.</i>

Yeah, right. Now tell me the one about the three bears.......

“Now that the court has brought clarity to the process, our path is clear to continue with renewed vigour to make improvements that producers want for their marketing organization,” Ritter said.

[charliep]

Mistake alert. Put the wrong link in the first posting.

http://www.cwb.ca/db/contracts/ppo/ppo_prices.nsf/fixed_price/fpc-desbarley-2007-2R-20070815.html

http://www.cwb.ca/db/contracts/ppo/ppo_prices.nsf/fixed_price/fpc-desbarley-2007-6R-20070815.html

http://www.cwb.ca/db/contracts/ppo/ppo_prices.nsf/fixed_price/fpc-barley-2007-period1-20070815.html

Will also post the EPO values. For the money, a 100 % EPO islikely a better route to go - you at least have the opportunity to participate in rallies above the PRO. Still a rip off but what the heck, its money and farmers have lots of it.

http://www.cwb.ca/db/contracts/ppo/ppo_prices.nsf/epo/epo-select-2007-2R-20070815.html

http://www.cwb.ca/db/contracts/ppo/ppo_prices.nsf/epo/epo-select-2007-6R-20070815.html

http://www.cwb.ca/db/contracts/ppo/ppo_prices.nsf/epo/epo-barley-2007-period1-20070815.html

[malleefarmer]

Barley hit $304 per tonne yesterday which equates to around $280 on farm price for feed barley.

The year in aust is for 25% of aust poor, 30% below average and could be critical within a week and the rest probably average

[charliep]

malleefarmer

I assume $304 is Aussie dollars. Is this price instore port/some other location.

If Aussie dollar, one Canadian loonie equals about $1.183 Aussie bucks. Bank of Canada website.

[craig]

Malleefarmer.
Didn't you realize that the board is basing there malt pro's on a bumper Australian barley crop. So much for there weather surveillance department.

[malleefarmer]

$304 is delivered port, i calculated it back to price on farm.
yes aussie dollars

[charliep]

You will have western Canadian farmers. Our barley logistic costs are likely about a $10/tonne (will vary by farm) grainery to elevator, $55 to $65/ton elevator to port (rail frieght $30 to $40 plus, elevator handling - $14/tonne, cleaning - $8/tonne). So far just in store so have to add on another $15/tonne for loading a vessel at port. Then ocean freight gets deducted. None of the above has included interest and storage. Adding them up, the western Canadian farmers has deductions from an international $85/tonne. Aussie dollars 100/tonne versus your $24/tonne. May be overstating by the cost of loading a shop (your quote could be instore).

A weird thought on a Friday. Lots of critism about ethanol on the issue of energy balance. I wouldn't want to do the energy balance on feed barley from seeding/harvest, handling including railing 1,300 km plus across the mountains, loading on a boat, shipping half way around the world and finally feeding to a camel. I wonder how the energy the camel digests compares to what is invested in growing and getting barley there. Sorry off topic.

[charliep]

malleefarmer

I expect a question on the cleaning costs. Every Aussie I have ever explained our system to asks this usually proceeded "You don't ship clean grain off the farm?". The answer is "because" with others filling this blank in for me.