CWB trapped?

[Riley]

There have been rumours for some time and reiterated today by a private U.S. consulting firm that the CWB is trapped (short) the Mar MGE contract and can't get out. This same firm indicated that "synthetic" futures for that contract are now in the $20/bu to $22/bu range. Anyone else hear anything? Thoughts?

[NDHAWK]

Heard the same thing on the Red River Farm network out of Grand Forks ND.I beleive the name of the analyst is Mark Fitchner of RML Trading in Chicago. Anyone know what volumes,obviously a large amount?
Charlie what are the ramifications to the pool account and other CWB options?
Looks like the CWB will get a "premium price" but it will be for farmers outside of CWB area!!!

[Zaphod]

I thought it was the CWB too, but I'm not so sure any more. I talked to an eastern wheat merchant who suggested the CWB is out of the March contract altogether and their May position isn't very big, only the unsold FPCs. Most of their export sales are apparently done back to back, and not hedged.

He felt it wasn't a futures squeeze at all with the cash market way ahead of the futures. Normally, a futures squeeze leaves the cash market way behind and the basis gets really weak. In this situation, the basis is incredibly strong with cash prices climbing faster than the 30 cent limit in the futures.

[charliep]

Agree Zaphod that it is unlikely the CWB has March positions left. Even May and July would provide a bumpy ride. Implications will be for the results of the 2007/08 producer pricing hedging account and the contingency fund.

Interesting CWB asking prices in Vancouver topped $21/bu today. $771/tonne. Will post the link to our weekly grain update when available.

[charliep]

2/3 of the way down.

http://www.agric.gov.ab.ca/economic/stats/wkgrain.html

[cottonpicken]

I heard budweiser uses corn for their beer.

This would explain why it sucks so much.

[charliep]

No one commenting Parsley. Would appear the CWB has moved from the initial proposal of having the farmer CashPlus price based off 90 % (or some percentage) of a blend of international malt barley prices (similar to the DPC process for wheat) to a proposal where the DailyCash price will be a 90 % value for the actual price the selector will pay the CWB. The extra 10 % will to the paying CWB administration costs plus storage payments (still will exist) with the remainder paid out at the end of the year in the form of the dividend (perhaps a new word for final payment).

I encourage everyone to understand and follow what is being proposed in the CashPlus program for malt. Ask the CWB/selectors you deal with questions and demand answers. There is no guarantee of change and this program may be your only choice (if you grow malt barley).

I note the comment that selectors (domestic and export) are/will be offering this program. As chaffmeister said, they have no alternative in a market where brewers are booking malt now. The expression you snooze, you loose applies.

[parsley]

I think you mean lose, charliep.....lol, but perhaps the former is more appropriate. It's shatty, no matter which way you look at it.

My latest gossip-take, yesterday afternoon, is that the farmer gets $7 bucks. At delivery time, he receives the "pooling initial price". Don't know what that currently is. Say $3 bucks?


The rest of the cash, $4bucks in this example, depending upon the initial pooled price, would be paid to the farmer later. I was told within 14 days.

The payment to farmers will be made from the pooling accounts.

The maltsters are buying from the CWB for $8.50. But it also may be negotiated to $8.70. They want some 6 row in the ground, so they caved.

And then the comment was made that the $1.50 per bushel floating-difference should reflect a later final payment. Unless of course it's needed for, say, the CWB's favourite Liberal candidate's campaign. Meow.

All this can change with a spit and a hork, BY spits and horks.

Parsley

ISSUES:

Is there a delivery guarantee for the farmer? Malt doesn't exactly keep well for five years!

Take a run at the issues.It's your money.

[parsley]

Some may find it offensive watching the maltsters and the CWB's financial-copulations, pillowed by your cash, and all you can do is peep, but you'll just have to learn to sit back and enjoy it.

Parsley

[charliep]

I apologize for the freudian slip.

[parsley]

SO...........


...................if the farmer recieives $7 and the maltster pays the Board $8.50, does that mean Marketing costs are $1.50/bu? hmmmm


OR

the rumor goes, that the first maltster to jump ship and take off their choice-clothes, bought their malt at $6.50 from the CWB


SO

the $1.50 diff will go towards cutting the loss of the cheapy sale to the maltysnitch.

Is this speculative enuff for a Saturday night?

charliep, you like intrigue.

Parsley

[charliep]

Should just watch hockey.

Interesting. Will note an American company. Also control the supply chain after the CWB/the company in question have completed the deal right to the end consumer. From a tour of Labatt's in Edmonton, one of the most persnickity on quality/process. Not my favorite either, cottonpickin, but the brand name is litterly worth billions - they will do nothing to threaten it.

Noted the move by the company in question into China in other threads and the fact they are not building malt plants in Canada. And the reason would be?????