CWB at a cross Road

[TOM4CWB]

Melvill,

When talking with a local CWB farm rep yesterday... we had a frank discussion about CWB pricing policies.

Clearly the pricing/sales of CWB through the pool system is hurting everyone who is skilled and needs the opportunities modern markets provide.
This policy is hurting he environment, MUCH MORE WINTER WHEAT WOULD BE GROWN in western Canada... if the CWB had a market driven pricing structure.


It is not fair to charge the CWB sales dept. with the responsibility of making decisions of selling wheat for my farm and associates... which is what happens for the most part now. Basis is a HUGE problem because the pool system of formula pricing... instead of market demand driven sales... this is tearing the CWB system down.

Ontario Board cash elevator pricing yesterday of $260/t for Hard Red Spring... and $280/t for Hard Red Winter highlights the issue in no uncertain terms.

ALL CWB Producer Pricing Option grains the CWB sell now are priced through the POOL and always have been. This is backwards and needs to be reversed. The CWB people MUST be responsible for facilitation of sales... not making the sales themselves. Daily Cash sales can easily be turned into a yearly pool price for those who need formula pricing and don't want to make personal choices of when to sell.

WE Wheat growers MUST be responsible for our own decision of WHEN to sell the grain we grow... just as we are in non-board crops. This is only fair to every part of the grains industry... and a requirement for a market based economy that must compete in the global market place to survive.

IT IS GREAT TO SEE CWB CWRS FPC CASH PRICES APPROACHING US FARM GATE DNS PRICING.

US Elevator Co's have pricing programs that are not entirely driven by US grower decisions as well. The US basis will be wider and reflect marketing decisions made by these elevator co's... as they themselves flatten out the pricing of wheat in the US taking the tops off... and bringing the bottom prices up often as well.

The CWB ~!CAN!~ be market responsive and reflect/arbitage world prices. Will the CWB Directors meet the challenge and hire a President/CEO that has the skills to lead us into this new erra! Willl CWB Directors dump the Pro Bono Feed grain policy for the domestic livestock industry... and fulfill their duty and stated obligations to grain growers in western Canada!

We are watching... waiting... and some even hope the CWB can salvaged!

[silverback]

Any tinkering they are doing right now is just window dressing to salvage their lack of ability Tom.

I do not agree that the organization can be salvaged in a way that will help our farm.

Others do and that is fine.

The cwb has no right to decide when I should be able to sell my own product or to whom. No organization deserves that kind of power when they have not asked for it.

They share none of the values that I have and their ideology is at odds with mine.

[TOM4CWB]

Silverback,

I agree that many disappointments and deceit has made this a hard situation. I am an eternal optimist... as I am a grain farmer this goes without saying!

Besides... my name is TOM4CWB!

I know I am just a dreamer... and a forgiver.... and maybe some will say just plain stupid!

I have the policy of stating my case... hoping it might help our marketing situation...

I know I know... the likelyhood is I have just proven I am a fool... as the old saying goes!

Better to try and fail... with passion and sincerity... than not try at all!

[AdamSmith]

The question I'm asking myself, this damp non harvest morning, how can the cwb maintain what little support it has while wheat markets worldwide are trading at the stratospheric levels and at such a fast pace.

There is no blueprint for decision making in this environment. $8.50 Chicago wheat would seem like a no brainer to sell, but what if we're only half way to where the market is going?

Here's a quote from this mornings DTN's Before the Bell comments, it should give us all pause.

"In continued support for the wheat rally, India continues to buy wheat without sensitivity for price."

and then this...

"...but the U.S. crop is already known (except for about 4% of the spring wheat harvest) and we are currently the only country with wheat to sell, so all changes to the supply and demand balance essentially come out of U.S. Stocks.

So I'm asking myself do they know something we don't (I'm sure they do) and that the cwb AGAIN has sold the bulk of the 2007 wheat crop prior to this rally and for all intents and purposes, western farmers are going to be left just standing out in the stubble fields with our ***** in our hands and nothing to do but watch the most amazing opportunity in farming, in the last 30 years pass us by.

And can the cwb pool handle wheat at $12, paying for FPC and Basis contracts and the like, while the bulk of the wheat has been sold for $5?

Wouldn't this cause a critical meltdown of the CWB??? Instead of the China Syndrome, it will be the Chicago Syndrome.

[agstar77]

The question AS is when would you have sold or would you sell if you are a farmer in the U.S. market? Conventional wisdom tells you to sell at a price where you can lock in a profit. But do you have the discipline? If you follow the experts advice you would have sold all your crop already, you would not be waiting for 12.

[AdamSmith]

Agstar that's a fair question, Don't think I havn't asked myself that question many times.

I look at the way I sell all other non boards. I won't sell any more than 20% prior to knowning what I have to sell. I'm sure I've missed some opportunities in the past but I'm just not comfortable with any number higher than that. Plus I like to manage sales to meet cash flow needs.

So if I could access the world wheat and barley market on a daily basis I don't think my approach would be any different.

I can assure you I wouldn't have sold any 2007 barley in the early autumn of 2006.

But had I done so, I would have been the only one to suffer from that bonehead move, and I could live with that. The CWB makes every farmer suffer as a result of their bonehead moves.

By the way I'm currently zero percent sold in barley ( I just discovered that all my barley is over 15% protien so it's feed) That's why I don't like selling something I don't yet have.

And zero percent sold on my non-board spring wheat (It's American)

2/3 sold on my winter wheat (non-board of course)

and 20% sold on my canola at $9.

So I've sold 16% of my production.

[AdamSmith]

Agstar wrote "Conventional wisdom tells you to sell at a price where you can lock in a profit. But do you have the discipline?"

Let's turn that one around shall we Agstar.

When the cwb sold all that malt barley in Sep or Oct 2006 was locking in a profit for the farmers even considered?

And if so, how does the cwb determine what is the appropriate amount of profit for farmers?

And so by your own definition of a disciplined seller Agstar, you would have to concede that the cwb fails miserably as a disciplined seller.

I sure hope you address these concerns you have at the next cwb board meeting.

[agstar77]

The point is if you follow conventional wisdom in selling your grain you won't have any left at 12, so selling at that level won't be a concern. Doubtful that a large part of the crop was sold at lower prices before the quantity and quality of this years crop is known. Will we get the higest daily price for all our crop of course not. But of all the grain sold in the world what would be a fair expectation for a Western Canadian farmer after all freight and handling charges have been deducted? Now that is the Billion dollar question?

[chaffmeister]

Perhaps this will help answer your billion dollar question, Agstar:

Range of farm gate prices for DNS 14 in Golden Triangle region of Montana over last crop year (06/07) – converted to Canadian dollars at current exchange rate at the time:
Low………<b>$4.49/bu</b>
High………<b>$6.35/bu</b>
Average…<b>$5.49/bu</b>

CWB total payment for CWRS 13.5 for 06/07:
$203.45/t………$5.54/bu……basis instore Vancouver
For an Alberta farmer this is about <b>$4.02/bu</b>

......<b>$0.47/bu below</b> the Montana low for the year
......<b>$1.47/bu below</b> the Montana average for the year

Agstar - I think, listening to all the CWB rhetoric and Borg comments in Agriville about the "benefits" of the CWB, that a "fair expectation for a Western Canadian farmer" under the CWB is a bit above average for the year. Average because anything below that would be unacceptable, and "a bit above" because the CWB is supposed to get premiums through price discrimination.

I think a fair expectation for a Western Canadian farmer is for much better than what they are getting with the CWB.


So tell me, what is so bloody sacred about the CWB that you can't see its shortcomings?

[AdamSmith]

"The point is if you follow conventional wisdom in selling your grain you won't have any left at 12,"

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Ah yes, but I've discovered that many of lifes best rewards are found by going against conventional wisdom.

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"Doubtful that a large part of the crop was sold at lower prices before the quantity and quality of this years crop is known."

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I'd feel so much better if a director of the cwb knew for sure instead of a speculative doubtful!

Or better yet that we had a system of full disclosure so everyone was working from the RIGHT information, instead of pure speculation.

By the way one of my favorite Dr. Phil quotes of widom is "The best predictor of future behavior is past behavior"

And known past behavior of the cwb would point to selling too much - too early.

[AdamSmith]

And speaking of disciplined sellers or un-disciplined in this case Agstar, I haven't forgot about this bonehead sale by the cwb.

How does this sale fit into the realm of Disciplined selling?

It makes one wonder if crappy CWB Wheat sales are like, "Rats"...

For Every One You See, There Are Fifty You Don't See.


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Segundo Pih, the business with Canadian wheat, made for mills northeast, it was only possible because the CWB “gave discounting of 30 dollars for ton and there it made possible the operation”.

“They had bought the 190 dollar (the ton), was 222 dollars (FOB) when had made the business has two weeks”, the president of the Pacific said, remembering that the first one must arrive at the end of the month at Brazil. The Canadian wheat already went up for 230 dollars. “Critical it goes to be the August month, we go to have that to beat eventually in the door of the North American wheat and of Canadian wheat, depending on the price and the freight. “| For: Robert Samoa/Reuters.

[liberty]

Chaffmeister,

Where did you get your info on pricing? I'm curious to see more of it.

[chaffmeister]

http://wbc.agr.mt.gov/Producers/pricing_historical_mt.html

and

http://www.cwb.ca/public/en/farmers/payments/

[liberty]

Thanks, Chaffmeister.

There's a wealth of info on these web pages. A big part of the reason that the CWB has been taking so much more heat recently is that farmers now have access to current pricing info around the world, something that didn't exist even twenty years ago.

[northfarmer]

agstar......the advisors and writers i use for marketing info have been specifically advising to wait
on this wheat market, and as such i have priced very little of the 07/08 crop.....what little i have has been priced at profitable levels.....clouding any decision making when it comes to the board grains is the unpredictablty of the actions on the borg when it comes to the out of pool pricing options which i have used exclusively for several years....free us please oh masters!!!!