2008 crop CWB Wheat and Barley poll

[TOM4CWB]

Question,

Does the CWB have the right, obligation, or authority to start selling the 2008 wheat/barley "Designated Area" crop?

Please tell us your opinion?

[TOM4CWB]

2008 new crop and the CWB;

In My Opinion; The CWB must only, by statute (CWB Act Section 32), market 2008 wheat or barley offered and contracted to them.

Honourable Minister Ritz needs to assure us this is the case.

1. If the present 08 market inverses do change and move up to higher levels, we need to be able to capture those higher level grain prices should they occur... WITHOUT CWB Pool pricing spoiling the basis and lowering the overall price.

2. If the Canadian Wheat Board sold half of next years (08) wheat and barley crop at very high levels, and world prices fall into the summer and fall of 2008; it would really distort the CDN domestic feed market and hurt our livestock and value added industry.

There should be no question what the reasonable balanced solution is.

The CWB MUST switch to a Ontario Cash Pricing type system.

The growers who want to pool with the CWB, they MUST sign up now to the 2008 pool if they want the prices offered today IN that 2008 CWB POOL.

[AdamSmith]

Good points Tom,

You and I and a thousand others know what the cwb SHOULD do, but

how are any of us to know for sure what the cwb DOES do?

Anyone who knows anything about "relationships" whether that be spousal, other family, friends, or business, knows that "open and honest" communication is essential for a healthy relationship.

So is it any wonder that the relationship between farmers and the cwb is in the ditch? The cwb is neither open nor honest with farmers.

I will use that Brazilian wheat sale made in June as an example, the Brazilian business press reported it as a wonder deal because of the discount of $30 a tonne, yet the cwb denies it,

So we have a he said she said situation and in those situations in order to decifer the truth we must examine motivation, I suppose the Brazilians could have been motivated to "lie" in order to justify buying Canadian wheat, but that seems unlikly.

So what would the cwb's motivation to "lie" be?

Well first off, the rules allow the cwb to lie without fear of retribution, all business is done under the veil of commercial sensitivity, that's just the way they operate.

Next the cwb claims to get "premiums" so it wouldn't look too good to expose the Brazilian discount sale, that's motivation enough in my mind, because it undermines their whole argument for maintaining the single desk.

Now getting back to your point Tom, all I can say is it sounds great in theory, but the reality is there is no mechanism in place to ensure it would ever happen.

So isn't it more important to remove the single desk (I'd like to close the cwb down permanantly, but that's just me)because without the single desk the cwb would be forced to become "open and honest".

[AdamSmith]

good thread Tom4CWB
one must think how the maltsters are working now. Is there going to be change some time this year or at least August 1/08?
We know the CWB contracted significant tonnage to the Maltsters over a year ago( somewhere between 600,000 - 800,000 tonnes). We know that, that tonnage is dragging down malt prices net to the farm. I love the way Weasel suggests they are getting top dollar. True they are yet one has to average that back into what they sold at dollar store prices.
SO how is the Maltsters working forward? Can or is the CWB offering them sequirity? Will selected maltsters be whining for government assistance come spring?
Makes one wonder !
Erik

[stubblejumper]

Tom does it realy matter what they do? You will say it was wrong anyway.

[stubblejumper]

Tom does it realy matter what they do? You will say it was wrong anyway.

[charliep]

stubblejumper

Its not about Tom4cwb.

Are you comfortable in the current environment with the CWB forward contracting to buyers on your behalf? I suspect the forward business would mainly be with domestic maltsters/millers. Why does the CWB offer these services to customers for free but charges farmers a fee/discount to manage the CWB risk on the producer pricing options relative to the overall pooling system. The note has already been made that a farmer can only lock in the futures portion of a fixed price contract. Why wouldn't the CWB match the forward priced products they offer wheat buyers with the pricing programs they offer farmers and manage their risk this way?

[charliep]

The above relates to 2008/09 programs. Same questions could be asked about the current crop year but that is not where the thread started.

[TOM4CWB]

stubblejumper,

Interesting perspective stubble.

If I did not care, why would I have posted both sides of the issue, and clearly stated the CWB should manage the business in a commercial manner?

Is there something wrong with this?

[charliep]

Would allowing the CWB to use basis levels used in new crop pricing (not likely much now) to offset the risk (perhaps more important allow them to offer a basis contract for 2008/09). I still don't understand why the CWB can offer cash pricing products to customers (which involves risk to the pricing pools) and yet they can't translate this into a producer pricing option (complain about too much basis risk).

[charliep]

In the above when I refer to new crop pricing, I mean forward contracts offered domestic millers, maltsters, exporters etc.

[sumdumguy]

I see the dogmatic inability for some people to truly evaluate the "benefit?" of the wheat board no different than some religious sects who can justify irrational ingrained misfacts. Over and over they are presented facts- truths. Still they insist on forcing their myths down our throats- fears of the big bad grain companies.

Historical basis for dogma:

Inhumane treatment of other humans and animals by defaulting to fear mongering, threats against and exclusion of those that differ have been ongoing throughout history. These people believe that they are right and you are wrong no matter how much proof they are offered to the contrary. The Dark Ages in Europe are a prime example of how humans lived in fear and suffered horribly before the reformation. We all can relate to many injustices perpertrated by these dogmatic enforcers over the ages. They all had something to gain by controlling others.

Restriction of Market Choic:

The cost to us as farmers (and something more than price takers)is huge. The injustice of being forced to accept the mediocrity has taken its toll on Western agriculture - the motors, not the ones that are just idling. There are many who don't believe the retoric and want marketing choice. Instead we are getting lewss and less choice, monopoly buying power, less and less competition in grain handling, and we should be happy- right!The supporters of the monposony manage to infiltrate every farm group and restrict progress by excluding those with opposing views. I'm sure you all have experience with this phenomenon. Its like a web that grows over farm groups and government agencies everywhere.

I would like to hear others' opinions on this subject.

[TOM4CWB]

Charlie,

Tell me if I got this wrong;

I believe the CWB 'Cash' prices everything they sell into the wheat market. If a customer wants to pre-price the CWB books the futures, then removes the futures position; when the cash sale is made to the customer to get the risk management effect of the hedge.

Am I off base here?

[charliep]

Not sure on what you are saying. The CWB obviously signs priced contracts with customers although I am not so sure they would go this far forward (start selling 2008 crop). They will all do things like book the basis portion is that makes sense. Most of the customers are sophisticated enough that they can also use the futures market (although this involves risk as September/December 2008 are likely pretty thinly traded.

The easiest way is to match farmer 2008 contract volumes with actual new crop sales that have been booked with customers. Always questions around CWB sales would be matched with these farmer programs but farmers who are forward pricing this far out should be getting a pretty hefty risk bonus.

[TOM4CWB]

Charlie,

I asked this because the CWB is talking about basis risk in a way that leads me to think they don't lock in the basis on wheat sales until they load the ship at the port.

Adrian also made it clear a few years ago that the CWB did not hold specific futures postions against PPO contracts growers had hedged, through until the FPC had been filled. When I brought this up on the Winter Wheat I needed to keep for Pedigreed Seed (Which it really was) and liquidate my contract, the CWB operator was sheepish and didn't deny this was the case. I asked why when there was a $25/t profit in the futures hedge, should I be paying the CWB $35/t to liquidate my FPC contract. No response. This leads me to believe the futures positions held now are done in much the same manner as when Adrian told me what the CWB did.

From what you have said I must assume the CWB did not go into these technical issues very much when you met them on Friday?