Announcement CWB Antidumping Tariffs

[charliep]

The US imposed anti dumping tariffs on wheat and durum today.

More information at:

http://www.ita.doc.gov/media/FactSheet/0503/wheat_fs_050203.html

http://www.cwb.ca/en/news/releases/2003/050203.jsp

[charliep]

Anyone with thoughts on the above.

My thoughts (to get the pot stirred).

1) The US is about 10 % of our market. The result of the combined wheat countervail and anti dumping is about a 10 % reduction in prices for product sold to US. US wheat prices may increase slightly due to slighly as markets react to lower Canadian imports. US wheat exports will also be reduced. Result - Canadian price reduction something less than 10 % (I would stick my neck on the line at closer to 5 %).

2) An interesting comment (perhaps to get the guys in the east excited) is the freight adjustment factor will have to be reviewed with my opinion going to full west coast CWB deduction west of the SK./MB. border justified. The arguments for the FAF have been not enough capacity on west coast (not relevant now) and a benefit shown the eastern prairies for their location relative to the Minneapolis milling markets. Both will not be factors in the coming year.

3) How will the CWB price to domestic mills now? The net price to US milling wheat markets is now 10% lower than before (the 3.94 countervail and 6.12 antidumping). A normal market would reduce the CWB domestic human consumption price by a similar amount.

[TOM4CWB]

Charlie;

On the countervail duty and pricing... now the CWB must put it's money where it's mouth is... PRICE Discrimination through the pooling accounts will be highlighted...

IF The CWB does continue to use a North American price... that price will not change... the US gov. gets 10% of the selling price on sales to the US... and the Canadian farmer gets 10% less on every tonne sold to the US Market. Canadian mill prices would not change, US millers will still pay the same as Canadian millers nothing has changed.

OR;

Will the CWB sell domestic wheat for less money than the US gross return to the CWB... taking into acount the 10% duty (6-8% less than the CWB charges US Millers)?

... Canadian Millers would then have a advantage... the pool accounts leave flex for the CWB that no commercial marketer could dream of... which is exactly the point of the US Action.

It is obvious this action is specifically targeted at the CWB... it is on CWRS, CWES, CPS, and CWAD.

The US is making a point... and I must say the point is obvious and clear...

The CWB has taken $25/t extra even on PPO contracts... that they are stuffing back into the contingency funds... the same point again, not commercial... but a monopoly that can do whatever it feels like.

This matches the duty quite closely... wouldn't you say?

[ianben]

Will this news change anyones plan on what to seed?

Obviously US does not want your wheat just like steel and lumber. I am sure CWB just an excuse to impose this tarriff and would have found something else if you had free market.

Tom you say you react to market signals. Would it not be good to reduce wheat acres by 10% given this "faite a complie" by US

[TOM4CWB]

Ianben;

I am told the US is 10% of our wheat market... and that on that 10% we could have a maximum of a 10% reduction (Charlie figures 6%) on price...

This means less than a 1% decrease... which means nothing... in the big scheme of things...

I hope the CWB will start a truly transparent cash pricing system... that would satisfy our need to have market transparency and an accountable CWB that stops playing political games...

The CWB is right... there is no need for "designated area" high quality wheat to be dumped anywhere... with market choice we could resolve this dumping in five minutes...

If I had the simple choice not to use the CWB pooled system (a reminder that PPO contracted wheat still are sold through the wheat pool, not outside the pool as any sane system would require)... then this whole problem would resolve itself.

AS far as I am concerned this is a direct cost as a result of Part IV of the CWB Act, and the Canadian government is responsible to pay the duty... NOT "designated area" wheat producers.

[brian99]

Tom:
I don't think the CWB is the issue here when we are talking about antidumping, which is the biggest part of the new tarrif. These are cost related factors, not marketing alternative philosophies. Whether they are legitimate is another question. The US would have found some excuse to impose tarrifs regardless.
Does anyone else see a pattern here? Softwood lumber, steel, salmon on the west coast, lobster on the east coast, and most recently COOL and the new wheat tarrif?
Are the Americans losing their competitive advantage and becoming more protectionist to compensate?

Charlie:
Are we 10% of the US market or are US exports 10% of our output? If it's the latter there wont be a 5% price drop.

[brian99]

I believe that the CWB is the issue in regards to tariffs because they are anon commercial seller in the grains trade. They have no financial interest in price marketing, so the best price could be for what ever they dump it for.

Over the years there has been penlty of prove of the CWB dumping CWRS wheat into different markets in the USA. The CWB will tell you themselves that 50% of HRS is sold into the USA at average to above average prices, that leaves 50% that was dumped on the market. Now by the time that you get the 100% mix for the PRO price the Western Canadian farmer comes up $.50 to a $1.00 short on a cash price south of the border.

If we had a wheat price developed by contracts on the WSE, the price would be higher than the PRO by similiar amount.

The CWB is not a subsidy to farmers but a determinate to their industry not only in Western Canada but to farmers all over the world.

You say why does it effect other farmers in the world. The way the CWB markets wheat by keeping 20% of the exportable wheat out of the free market where price discovery is made, no one gets to bid on it as in a free and open market. The wheat is sold away from the open market causing it to weigh on the price of the open. Thus creating a lower price for a commodity on the world market. You done have to be an expert to realize the CWB's cherrypicking, dumping and non commercial marketing hurts everyone in the grain business.

It no wonder the USA farmers are mad, they see the dumping the CWB does to their markets at their locate elevators. You would not find farmers dumping into the USA or Candian markets. Farmers don't dump they get the best price they can or they don't sell.

[TOM4CWB]

Brian99;

This is the reported sales into the US last year;

$86,570,804.00 US Durum sales in 2001-02 @ 12% duty is $10.39 million US

$203,630,157.00 US Hard Red Spring sales in 2001-02 @ 10% duty is $20.36 million US

$30mil * 1.4 exchange to CDN dollars...

is about $43 million on CWB sales last year of about 3.75 Billion...

or 1.1% of total CWB wheat and Durum sales

Obviously the US is trying to get our attention... not breaking us or outlawing sales into the US...

Remember Soft red winter, Hard Winters, and Soft white wheats have no duty applied to any of these exports to the US from Canada.

[charliep]

About 13 to 14 % of Canadian wheat exports (forgot to include durum). The US imports about 2.0 MMT of Canadian wheat (1.5 spring wheat and 500,000 durum) versus a total exports of 15 MMT.

Looking at your way, Canadian wheat imports represent about 3 % of US wheat production (2 MMT versus about 60 MMT production - see http://www1.agric.gov.ab.ca/app21/rtw/selsubj.jsp.

[kslseed]

Hello fellows, all of this (steel, soft wood lumber, fish, etc.) is about the issue that we (Canada) sell in to the US to cheap. So, why not charge more if the want our product? Why is the penalties to adjust for all so called tarfif violations not charged north of the boarder, rather then allowing this money been spend in the US, it could be spend in Canada, if our government would act.

[wedino]

Tom4, >>Remember Soft red winter, Hard Winters, and Soft white wheats have no duty applied to any of these exports to the US from Canada. <<

Are the above wheats grown mostly in Eastern Canada?

[charliep]

My interpretation is that the countervail anti dumping applies to all wheats.

The below is taken from their press release.

"The products covered by the Hard Red Spring wheat investigations are all varieties of hard red spring wheat from Canada. This includes, BUT IS NOT LIMITED TO, varieties commonly referred to as Canada Western Red Spring, Canada Western Extra Strong, and Canada Prairie Spring Red."

[rain]

When LDP for corn start to go to US producers should we not be applying tariffs on corn, or meal coming into Canada?

What is good for the goose should be good for the gander!

[charliep]

If Canada applied the same principles, there would be high tariffs as not one kernel of US corn is produced that is sold at above cost of production (i.e. subject to antidumping)/would be counteravailable.

Why doesn't Canada go after the US on corn. The Manitoba Corn Growers Association did go this route late 1900's and would able to prove both countervail and antidumping (hence the short lived tariff. They could not prove damage to the western Canadian industry (corn doesn't make up enough of the prairie feed complex. To be successfull the Ontario Corn Growers would have had to support. They have not been willing to do this - they like being on a US corn plus freight price.

[rain]

I a normal year you are right charlie. However in the current crop year corn has displaced about 40% of the normal barley use for feed and about 75% of the normal feed wheat use in Western Canada.

Charlie do the math on new crop feed wheat and barley if corn futures go down to $2.00/bushel US with an $.70 canadian dollar.