Malting Barley

[agstar77]

CWB malting prices have averaged over 325 per tonne F.O.B., since August 1st.

[TOM4CWB]

OK Agstar77,

What bright "single desk" genious sold the majority of the crop at teeth shattering low prices last fall?

What on earth were they trying to prove?

Why would you sell something you didn't have, couldn't get growers to sign up to... and the whole malt pool now should be at $325/t... not working on a stupid "if you don't sell twice as much at a big discount... you won't get any more at all." and ship it to the livestock guy for feed deal!

WHAT A SCAM.

How stupid are we for letting these CWB people do this to us year after year?

So here are the SUPERSTAR justifications for all this rip off.



Newsroom
2007
Western Canadian malting barley in high demand

August 29, 2007

Winnipeg – Quality losses to the European and American barley crops have left the CWB as the world’s dominant two-row malting barley marketer, boosting sales prices and prospects for western Canadian malting barley. The outlook for the later Australian and Argentine malting barley harvests remains uncertain.

“The CWB has taken advantage of being the only major global seller of malting barley since August 1,” said CWB Chief Operating Officer Ward Weisensel. “With certainty returned to barley marketing, we have been able to capitalize on import demand from China, the United States and other markets at a time when barley is in short supply.”

An aggressive CWB sales program into the current high world market is translating into increased returns for Prairie barley farmers.

“The prices we are asking in certain world markets are the highest that our barley marketers can remember in U.S. dollar terms,” Weisensel said. “This is an ideal situation for single-desk marketing as there are no competing sellers to push down the price, while the CWB is able to successfully price discriminate between markets in order to extract the highest return that each buyer is capable of paying for our high-quality barley. These premiums will be directly returned to Prairie farmers.” Sales of two-row malting barley made by the CWB since August 1 have averaged $325 Cdn a tonne, or more than $7 Cdn per bushel, as a landed freight-on-board (FOB) value.

Weisensel said world barley prices and the CWB’s Pool Return Outlook (PRO) for farmers will increase if dry conditions continue in Australia, further offsetting lower-value sales that were made in earlier months, mainly to domestic malting companies. However, the PRO – as a projection of average return across all markets for the entire crop year – is subject to some uncertainty, given that markets are volatile and the Canadian harvest is not yet complete. A smaller-than-expected western Canadian crop or a sudden decline in quality, if harvest weather fails, could cause the PRO to decline.

“The more malting barley we can be confident of sourcing, the more sales we can be making at the current higher values,” Weisensel said.

Controlled by western Canadian farmers, the CWB is the largest wheat and barley marketer in the world. One of Canada’s biggest exporters, the Winnipeg-based organization sells grain to over 70 countries and returns all sales revenue, less marketing costs, to farmers.

-30-

For more information, please contact:
Maureen Fitzhenry
CWB media relations manager
(204) 983-3101
Cell: (204) 227-6927

[craig]

The board likes to tell us what a good job they are doing. Maybe they should tell what the average price was for malt sales the previous 6 months before August 1.

[parsley]

You'd better hide behind those glasses agstarless, making a stupid statement like that.

Nobody in their right mind, stating what the CWB offerred farmers for malting barley before August 1, would want to show their face.

Parsley

[chaffmeister]

Let’s be clear – the CWB did not <b>make</b> these high prices.

An open market would see the same prices - if not higher - as buyers would compete openly for the barley, pushing prices up. Because of the way the CWB markets grain, when they make a sale, the market has no idea that anything has happened – unlike in an open market where the rest of the market sees and feels the buying interest through actions in the cash and futures markets. We know that the CWB is often taken advantage of by savvy buyers as they work to avoid triggering market reactions.

I am fascinated that the CWB (Ward Weisensel) can make two incongruous comments in the same sentence:

<b>This is an ideal situation for single-desk marketing as there are no competing sellers to push down the price, while the CWB is able to successfully price discriminate between markets in order to extract the highest return that each buyer is capable of paying for our high-quality barley</b>

So I guess he’s saying that in a “normal” year when there are competing sellers (Australia, EU), the CWB is unable to keep the prices from getting pushed down. Yet they can still price discriminate? Price discrimination implies setting prices unilaterally. How can they in a competing market? Saying they can discriminate in a competitive market is just - goofy.

(The CWB does not price discriminate. They will sell into markets that are lower priced because of proximity to other sellers while also selling to higher priced markets - due to proximity to Canada. In an open market, the higher prices sales would be assured of first, then - if, and only if, the market needs to clear more grain, the market price moves lower to make the sales. the result is, for all intents and purposes, the same. Some markets pay more. This is not rocket science, yet the CWB would like you to think so.

Now fast forward to this year. How does one price discriminate in a market where there are no other sellers? Don’t you just put the price on the moon and force them to buy at your price – regardless of who you are and where you live?

Price discrimination is setting different prices for different buyers (based on the buyer’s ability and interest to buy, both driven by what is available from other sellers). So with no other sellers, why would the prices be different?

Ward used the term “capable of paying”? IS he saying that some are less capable than others? Is this why the CWB sells boat loads of malt barley to China at <b>low</b> prices (I know – I have to be careful using that term, but, really, they have) and yet they don’t sell to EU at <b>high</b> prices (which they haven’t – at all). This seems dumb when you consider China sales go through the congested Vancouver port while EU sales would go through the under-utilized TBay /St. Lawrence.

And I'm pretty sure China is "capable of paying", especially when there is no other source of barley.

So……. even though the EU is apparently more “capable of paying” than China, the CWB doesn’t sell to them.

Even if China is a strategic customer, I think Ward just explained why the CWB should be telling them that the prices have gone to the moon. And yet they still “price discriminate” by selling to China at much lower prices than what they would get selling elsewhere (at the same time). But why would the prices be lower at all? Why price discriminate at all? Why not tell China, “We love you. You’re our favourite customer. Really, you are. That’s why we will sell you what we can, but please be aware that the prices are going to hurt. A lot.”

CWB price discrimination at its finest.

[TOM4CWB]

Chaff,

Who was that masked man?

This is the guy they are grooming to be the next CWB President/CEO...?

This is CWB inbred backbred logic at it's finest and most brilliant! They make a laughing stalk of every single "designated area" barley grower... wheather we will admit it or not!

Only in Canada.

[Fransisco]

I love these two comments

<blockquote>"“With <b>certainty</b> returned to barley marketing, we have been able to capitalize on import demand from China, the United States and other markets at a time when barley is in short supply.” </blockquote>

Followed a few paragraphs later by,

<blockquote>"However, the PRO – as a projection of average return across all markets for the entire crop year – is subject to some <b>uncertainty</b>, given that markets are volatile and the Canadian harvest is not yet complete"</blockquote>

There is now both certainty and uncertainty in the marketplace.

Everybody do the wheat board two step.

[Burbert]

Okay, lets get this straight. Last year feed barley prices were better than malt prices, blame the CWB for that! How many times in Comedia has that occurred? Now malt barley prices for this year are looking outstanding, blame the CWB for that! I don't care how much the duds on this site, huff and puff, blow and spew, market conditions dictate price, not hustle and chiseling. Gag has undergone much upheaval in the recent past, mostly off loading of expense onto framers. Home PCs and PCs in general, along with hitrueputt elevators and great rail service has done little or nothing to putt money in my pocket. Read it and weep duds!

[chaffmeister]

I’m sure you know this already, BB, but as a seller, the CWB can sell below the prevailing market price but can’t force anyone to buy above the prevailing market price.

CWB malt barley prices below open market feed prices? You bet that’s the CWB’s fault.

"Outstanding" CWB malt barley prices? Yes – but are you getting all that you should out of the market? Too many things pointing to “NO”.

The CWB is costing you money. Since you're happy to point at some issues that have “done little or nothing to putt money in my pocket” why not point out all of them?


What makes the CWB so bloody sacred that some people refuse to even consider its shortcomings?

[liberty]

Another of Ward W's statements caught my attention:

"These premiums will be directly returned to Prairie farmers."

Right. Just as soon as the accredited exporters and other handlers take their fat cut of the action, a cut which would be far slimmer in a multi-buyer environment. Unfortunately for western farmers, a monopoly buyer like the CWB can pad the wallets of its friends in the grain industry at farmers' expense thanks to its monopoly status.

[Zaphod]

You're right Burbert, the market dictates the price. That's why it's laughable that the CWB says they extract extra money.

I wonder how the CWB takes credit for this. I knew they have a powerful weather department, but yikes, now they can make weather and not just predict it? Wait a minute, if they can change the weather, that would out them on the same level as the Man upstairs. How scary is that?

[craig]

It looks to me that the CWB is on a slippery slope right now and how well they do will be pinned on the barley harvest in the northern part of the prairies. A small malt crop will mean the early low priced sales will make up a larger portion of the malt price and drag the pools down. Right now there has been rain in the forecast every few days and frost risk is there; not good malt barley harvest conditions. If the cwb fails to deliver on malt this year it will only add another nail to the coffin. That being said there are many producers who are prepared to believe the board is doing a good job even if it doesn't show up in farm gate returns.

[Zaphod]

Yesterday, Wiesensel said they had sold 700,000 tonnes to domestic maltsters months ago at "lower prices". I thought their strategy was to sell roughly even amounts through the year. I understand some forward-selling is a good idea, but this means the board sold roughly three quarters of the domestic maltsters' needs before the crop was even in the ground.

They are going to have to sell a lot of malt barley now to increase the average pooled price to reasonable levels. Wiesensel refused to say how much they had sold since Aug 1 at prices around $325 per tonne. I'm guessing it won't be enough.

[chaffmeister]

Memo to Agstar:

Just to keep you informed, I have never “predicted the market” here on Agriville – or anywhere else for that matter. My focus here on Agriville, if you haven’t noticed, is to show as clearly as possible that the CWB system is not working for you. It’s costly, it’s cumbersome, and it saps entrepreneurial spirit. Contrary to what the U of S might try to say, it does not get premiums and yet it keeps individuals from snagging them for themselves.

I guess I have made one prediction – farmgate prices on both CWB and non-CWB crops would be better without the CWB.

You admit you are “no better than the rest of the traders who claim they are lucky to be right more than half the time” – and you must know full well that CWB traders are in the same category, even though they don’t even try to be “right” because they aren’t traders – they’re salesmen. I was told by one CWB salesman years ago that they would never refuse to sell on the grounds they thought the price was going higher – they might be wrong and they might lose the sale. So whenever the buyers are calling, the CWB is selling. It has nothing to do with maximizing farm returns or with averaging prices over a crop year. It has everything to do with covering your ass.

The only plank the CWB has left to stand on is this idea that they can price discriminate. And if they’re blowing grain out the system like they appear to be (i.e.c heap), who cares if they can squeak out a slightly better price from Japan than from China on a particular day (which they can’t).

Here’s a bit of irony for you. The CWB has always said that it gets premiums from the domestic maltsters on domestic brewing business. Their definition of premium is of course a better price than they would get from another buyer ON THE SAME DAY. Well, when they sold to the domestics last fall, they may have gotten a better price than they would have from say, China, BUT:
1. They weren’t selling to China (or anyone else) at that time so it’s a moot point, and
2. The sales to the domestics certainly aren’t premiums to other markets now, now are they?

I asked this in another thread – I’ll make it a direct question to you Agstar: What is so bloody sacred about the CWB that you won’t even consider its shortcomings?

You like to look at transportation and talk about support systems, yet the biggest financial problem for grain farmers in Western Canada is the CWB – with its poor performance and high costs - and yet you won’t touch it. Won’t discuss it. You think anyone who wants to get rid of it is self-serving and greedy.

You can fix all the transportation woes you can think of but the CWB will still cost you more.

You can put in support systems too – but let’s face it, they would just be there to counter the poor economic returns from the CWB system. As a taxpayer, I get incensed by the idea.