CWB Long Term Forecast Released

[charliep]

Just a note the CWB released its long term forecasts today. They can be found at:

http://www.cwb.ca/en/buying/market_commentary/forecast.jsp

[TOM4CWB]

Charlie;

THE PRO released to us today is an insult!

FEED barley and Wheat saying that farmers will only recieve... at the farm gate... 50lb feed barley... Alberta price average for 2003-04, of $87/t... $1.89/bu... Feed Wheat at $82/t... $2.23/bu... someone is smoking something in that CWB!

If the CWB can bring down prices this low... there is no question that this is abuse of the Monopoly...

THE USA is totally right... this must be dealt with immediately!

We cannot afford to have a marketer who would even suggest this is a reasonable possibility... let alone one with a single desk monopoly!

TALK ABOUT DUMPING... the CWB saying they will be selling, many times a good milling wheat (feed wheat to the CWB)at $56.00/t US!

Selling 51lb/bu feed barley at $60/t... and the CWB puts this out as a reasonable, trustworthy accurate forcast!

With freinds like this who needs enemies!

[TOM4CWB]

That CWB barley price was $60/t US at .69 CDN exchange...

[charliep]

Perhaps the CWB is admitting they are not in the business of selling feed grains. The question on feed barley over and above your points is how much of the $7 to $8 interest income from old debt is included in this. I found the drop in 2002/03 pool returns even more interesting. If world wheat prices don't increase, look for these numbers to come down even more.

[charliep]

Should be $7 to $8 mln interest income.

[TOM4CWB]

Charlie;

Silly me, I forgot about that interest income...

I see Chairman Ritter sees no reason for the CWB to work with the Alberta Government on a test market... isn't the lower grade wheat and barley the perfect reason for the CWB to co-operate?

[TOM4CWB]

Charlie;

I see on the long term barley marketing news release the CWB wrote;

"Canada’s feed barley exports are projected to stay below 500 000 tonnes with the minor exporters increasing their market share for world feed barley to 52 per cent from 28 per cent in the base period. World trade in corn is predicted to climb by 23 per cent mainly due to increased demand from Mexico.

The CWB’s long-term grain trade forecast is available on the CWB’s Web site at www.cwb.ca

"Controlled by western Canadian farmers, the CWB is the largest wheat and barley marketer in the world.""

How on earth can the CWB claim to be; "the largest... barley marketer in the world." ???

I forgot... only the CWB markets grain... every one on earth just gives it away...

[poorboy]

charliep,

Why would you expect the next pros for the current year to drop even more. Would not most of the years sales have already occured, so that we should be fairly certain of the price we will receive?

Or is it just that the CWB had already sold 1/3 of normal prairie production last spring for what it thought was a decent price (just like any farmer locking in a price on 1/3 of his production), and then the prairies only grew 1/3 of a normal crop.

If the CWB hadn't greatly exaggerated its PRO's in the fall to reflect the US futures price, then no farmers would have signed grain up on the A series contracts and the board would not have had enough supply to meet the presold grain.

I think it is a joke, the PRO's are going to drop to last springs levels, because the CWB did not have any extra unpriced wheat that it could have sold into the high priced fall market.

Damned if you do and damned if you don't. If the fall price had been lower we would be screaming that the CWB didn't preprice any grain and the way it is we are complaining that they missed the high prices. Hopefully, they have large hedges from the spring program that will add large amounts to the presold grain.

Perhaps they should move to an earlier contracting system, where I could commit some tonnage in the mid summer period, when I have an idea of my crop size, and they could guarantee a certain price range for the period. This way they would know that I am willing to commit some grain for this price range, and it should help them to market it sooner, instead of having to wait untill the end of October to know what they will get for volumes (A series).

[TOM4CWB]

Poorboy;

1. We need shorter pools... people who did not commit A series contracts now get to cherry pick.

2. Farmers are the ones who should decide when grain is sold, and at what price... the CWB MUST become a facilitator of our sales... not make our sales for us.

3. We need minimum price contracts for next fall, that should have been offered last October (02)... when Ontario Wheat Board sold many tonnes of their 2003 crop. Why did't the CWB offer this to us in the "Designated Area"?

4. The CWB must get out of feed grains, or start offering competitive pricing... one or the other!

5. THe CWB admitted to me that the PPO Basis widens as the crop year proceeds...

I say this is a natural tendancy... as the carry and volatility factors reduce price as we get closer to the expiry of the futures month.

Yet the CWB says it is entitled to this money... for the contingency fund... yet the farmer takes all the risk... the CWB keeps the cream off the top... NOT FAIR!

Voting with our grain, will be the best democratic system... like everyone else in society can do with almost any other industry!

[charliep]

Poorboy

I have been keeping track of the relationship between the converted MGE futures and 1CWRS 13.5 PROs. The highest futures price on the day of a PRO (will use the May contract to be consistent with what is published today) was on Sept. 26 - $272.09. The converted May futures on March 26 was $195.74. Both numbers are off the CWB web site. Loss in futures $76/t.

The 1CWRS 13.5 PRO in Sept was $308/t (actual high was in Oct. at $312/t). March PRO - $256/t. Decline $54/t.

Improvement in relationship (basis if you like) between PRO and futures about $22/t. This improvement reflected the sale of a small crop (more sold higher value customers).

The reason I go through the numbers is to clarification on your comment - "If the CWB hadn't greatly exaggerated its PRO's in the fall to reflect the US futures price, then no farmers would have signed grain up on the A series contracts and the board would not have had enough supply to meet the presold grain."

The reason for my question is a futures price (perhaps with basis risk) is a real price - a perfect hedge if you like. In the fall, there was a large inverse in futures (higher nearby prices relative to 2003 - a signal to sell. A PRO is a forecast/theoretical price. Because its an average price, is removes signals as to when to market.

The above comes to the understanding of how a farm manager views price risk (or opportunity capture) and the steps they can take to lock in profit.

[poorboy]

CharlieP

Surely the CWB is not just a price taker, getting the price for the day of delivery to the customer. Hopefully, they are using some judgement tools and pricing mechanisms to cover the crops to be grown. My understanding of the wheat board all along has been that they are one big farm manager, using all of the prairies grain and marketing it in as efficient a manner as possible.

Using the above assumption, most astute farm managers have presold a bunch of expected production before seeding also. In the case of the drought last year a lot of farmers had presold some grain in the spring at a much lower price than the fall price, yet they never had enough production to exceed the amount prepriced in the spring and had no grain left to sell into the higher fall prices.

I have wondered all fall and winter if this has happened to the CWB also.


Maybe I am confused, and the CWB just sell grain at the spot price when customers come knocking at the door, and just average the price out over the year. Is there any proactive grain pricing that occurs?

[poorboy]

Thanks for the weather forcast CWB. A marketer you ar not and you do a great injustice to the farmers of Western Canada with your grim reaper forcast. Thanks Again you bone heads.

[TOM4CWB]

Kernel;

I second that motion...

The CWB TELLS us they are here to "extract a premium" and "maximise Western Canadian wheat and barley producer's returns".

I fail to understand how perdicting feed barley and wheat farm gate prices...

for fall 2003... at 60% of hedgeable values... is constructive of helpful...

THIS CWB practice is very destuctive and sickening!

Does the CWB think we are total...?

Is this respect for our property?

[charliep]

Boone

You ask the billion dollar question.

The CWB for the most part does run the wheat and barley pools like a giant farm. They use market tools on your behalf and pay farmers out on the results.

Under these assumptions, how should the performance of the CWB be evaluated as to whether they have done a good job? What evidence is they sell above market prices?

Curious to as to whether you will be using the new CWB producer pricing options?

[TOM4CWB]

Charlie;

Is there any wonder why we in Alberta import corn?

With forcasts of doom for feed grains by the CWB, mistrust and instability the operative sentiment... instead of growing our feed stocks for value added processing in Alberta, we are destroying our AG infrastructure by destabilising the feed stocks supply so badly our whole Ag industry has become disfunctional!

We need $5.00/bu malt barley contracts... so farmers will grow barley... the risk reward MUST be profitable for my, or I and my commercial farmer partners will grow something other than barley!

If we don't plant barley... we must import corn!