CWB's little black book

[gregpet]

Got some information about the CWB’s little black book. This is the book that the directors claim the CWB sells our grain a premium prices. Kyle Korneychuk told us at his meeting in Foam Lake that he looked in the black book when he was first elected and yep sure enough the CWB sold our grain at premium prices.
After some digging and phone calls I found out how these prices are determined. Not surprisingly, in a monopolistic mindset the seller at the CWB phones around and finds out some prices and the they themselves determine what the ‘market price’ is that day. Then if they make a sale for $5-6 a tonne more than whatever price they themselves determine to be the market price they have concluded that they have sold our grain at a premium price. So, if I understand correctly, the sales person or group of sales people determine if they are selling our grain at a premium? Vader, Agstar77 is this correct? Please tell me I am wrong. Hopefully the internal audit of this process is not delayed any longer like it is being done now. I encourage all of us to contact our CWB directors and have this added to the agenda for the next meeting so it can be discussed.
One other small thing. I also found out that these sales people are so concerned about selling our grain at a premium that it does not matter when the grain is sold. Like they say timing is everything so when the phone rings after the market has fallen considerably they may sell at a premium that day but have missed the highs in the market. Doesn’t sound like they worry about timing the sale properly just making the sale when the phone rings and the market has retreated.
Vader, Agtar77 any comments? Am I wrong? Did I receive inaccurate information? Please enlighten us.

[gregpet]

This quote taken from the CWB's website "The CWB is your business." Lets make our business and find out why this internal audit is being delayed.

[LWeber]

Who at the Board of Director's table has sales experience to determine that farmers are receiving a premium let alone control a $4.5 billion sales company?

[chaffmeister]

Gregpet - You've got the process right. It is the sales staff that determines the comparison prices.

Also, you're right about the timing thing. Because all the CWB does is sell and sell it must, it's blind to market timing issues.


Think about this as well: when an end-user buys 100,000 tonnes from the CWB, the market doesn't feel the impact at all. But if that same end-user bought 100,000 tonnes in the open market (Say from another exporter), somewhere, someone would feel the impact - prices would be supported and may even firm up. Sellers making those sale would be buying cash grain and futures to hedge the sale, supporting prices. (How many times have we seen the canola market rally because China just bought?) Subsequent sales would be made at higher prices because of the business just done.

End-users buy from from the CWB when they want to cover large amounts of their needs and don't want the market to react (rally) due to the buying.


So a question you should be asking CWB directors: how much of a market rally or general market support are we missing out on because a sale went through the CWB and was never hedged?

And then compare that to the elusive premiums.


I've also always wondered - what about all the sales that the CWB misses? I'm sure the black book doesn't record those.

Larry's right too - who in that room REALLY understands what they're looking at? Even if they understood the markets, I will bet that there isn't enough information in the book to judge anyway.

[wilagro]

You guys make me laugh...none of you have a clue about what you are talking about. It is all SUPPOSITION so as to spread MIS-INFORMATION and dissent.

For gawd's sake, give it a rest.

[gregpet]

Wilagro, then let Agstar77 or Vader refute this if it is supposition. If they do then one of us must be lying. I asked them to clarify if I was misinformed. Don't be so quick to accuse, I was just asking some questions about some information I went out and found.

[charliep]

wilagro

Will note these numbers are used in the annual report as a performance measure. Any stakeholder should be able to ask the board of directors/operations side how the numbers are determined.

Why shouldn't the process be open in terms of methodology if not the actual numbers? Does your dismissal of them means you are as uncomfortable with them as everyone else that has spoken in this thread? Or do you believe the CWB shouldn't be held accountable to the numbers they publish in the annual report?

[LWeber]

Answer the question Willy:

Who at the Board of Director's table has sales experience to determine that farmers are receiving a premium let alone control a $4.5 billion sales company?

Set the record straight then if you think that is "SUPPOSITION so as to spread MIS-INFORMATION."

[charliep]

Will let others carry on the battle.

Will note the following quote again from the annual report.

Quote bottom page 43: "The wheat pricing model establishes the pace for pricing the wheat pool. The pace is denoted as the target price pace. Pricing with the model is a combination of actual sales activity and derivative trades. Pricing is more or less than the daily "target" amount is regarded as the discretionary sales activity. Daily sales and derivative transactions are benchmarked to the current futures market prices at the end of each day. In a rising market, as was the case in the summer and fall of 2007, results will be negative if the actual amount of the wheat priced exceeded the amount to be priced by the target pricing pace. Tonnage priced at earlier price levels will produce negative results when these positions are closed out at the market price above the level at which they were initiated."

Will note the performance measures are based on their ability to capture premiums based on what the operations side tells the board of directors (as indicated by gregpet). For cottonpicken and others, it does not include sales timing.

[SASKFARMER3]

Same old thing every time their called on something they simply wont answer the questions. Lets get a inquirery its our GRAIN FOR GOD SAKE!

[charliep]

wilagro

Perhaps you can help me on malt barley. Page 43 of the annual report shows a $13.45/benefit for malt barley. Page 50 of the annual report shows a port based returns for malt barley of $194.41/tonne. Feed barley pool "A" was $194.41 (page 53) and pool "B" $260.18 (page 55). I assume the difference between malt and feed barley is timing of sales. How can you compare CWB asking prices to outside markets if the sales department is not active that month? How does the CWB average out sales when there are effectively no real hedging tools for malt barley? Where did the benefit come from?

[wilagro]

I am sure that the CWB regards many of the enquiries into their operations as being vexatious, hostile, and nothing more than hassles from their "non-supporters"...a kind of behaviour designed to hamstring them and deter them from doing their duty towards the farmers of the DA.

I had a boss like that once, who was always "double-checking" everything I did. I straightened him out on that rather quickly and told him to do the job himself if he didn't trust me to do it. He backed off and I worked for him for a dozen years or so. Maybe if you guys "understood" how grain marketing really works, you might back off too.

[gregpet]

Please enlighten us Wilagro, how does grain marketing work. Better yet someone else marketing my grain without consideration or knowledge of my financial situation.

[Fransisco]

Willy I would be more than happy to do the job myself. That is exactly what I want, to sell my own grain.

I am not interested in having you as a business partner, same goes for Toews, Korneychuk, Ritter, Flaman et al.

Thanks for finally coming on side.

[gregpet]

Good point Fransisco, Wilagro you asserted yourself and it worked fine. That is all I am sure most independent thinkers want. The freedom to market our own grain to whomever and whenever we choose and at what price. Thank you Wilagro.