THE CWB Great Grain Robbery

[TOM4CWB]

Dear Charlie,

Where did all the money the CWB stole on our Basis contracts go?

There needs to be a forensic audit... and find out what is happening... has happened since October 1 / 07.

It Sure looks like have averaged over $2.50/bu OVER the MGE futures... since then (Oct 07)... that is over $90/t. The basis has been as high as $300/t above the futures... and never once has gone negative.

This means that the folks who used PPO contracts... have cross subsidised the pools... 4mmt times $90/t... over $300 million. In the end... the pool will be over $30/t higher than it should be... if proper spreads were used on the basis.

New Crop:

The Great Grain Robbery Continues!

What gives... PNW/Gulf port new crop basis levels are still over $60/t OVER the MGE futures... so why is the CWB attempting to deduct $60/t off the futures price?

Why aren't the CWB being sued for theft?

Are the AB and SK govs blind... Shouldn't we get together and at least object to this theft from growers who took the initiative to TRY to manage wheat risk... and got a swift kick in the mouth from the CWB for being prudent risk managers?

Why do we accept this like sheep going to the slaughter?

[charliep]

There are many questions that should be asked about the producer pricing options both from the perspective of the product being offered farmers and how the CWB handles to risk of these programs to the overall pricing pools/management of dollars in the contingency fund. Suspect a large number of people and organizations including governments are taking note of this.

[TOM4CWB]

Dear Charlie,

The only way the bIG CWB bully... is going to be put in its place... is if Alberta and Sask clearly identify the weakness in CWB Risk Management... and force change.

How to do this?

Like we did with the Cow Benefit Offset Program.

1. We have a Basis Offset program for Ab. & Sk. that clearly indicates market signals on basis levels at port positions both West and East Coast of Canada.

2. We have a Buy-Back Offset program also for Ab. & Sk. that clearly pays the required CWB tookage on the buyback... and allows normal market signals to draw grain into the export market.

These two offset programs need to work together... or if done apart/or separately... they would most likely distort the domestic industry marketplace and grain infrastructure/handling transportation system.

If anyone has ideas on other approaches to allow Board grain growers transparent access to the market... Please indicate how this could be done!

[charliep]

Will leave your ideas for discussion. The annual survey from 2007 (2008 version released shortly) provides guidance as to why this discussion is important.

http://www.cwb.ca/public/en/farmers/surveys/producer/pdf/survey_062107.pdf

In 2007 (2008 results released shortly), 42 % of farmers indicated they favor a dual market (slide 9). Slides 11 to 14 ask people who favored a dual market why. They answers reflected the fact that increased competition would result in higher prices and improved cash flow/delivery opportunities. In slide 14, 94 % either agree or strongly agreed with the statement: "You would like to choose when to deliver and get paid up front for your grain".

Implications. Farmers want these programs. The CWB is responsible for and accountable to farmers for their outcomes.

[charliep]

Will note the results were almost identical in the 2006. Will expect similar results in the 2008 one.

[TOM4CWB]

Charlie,

I note the Ausies are back in the debate over the 'single desk'.

My news AU letter had some interesting comments today that are directly applicable to CWB marketing:

The pro single desk farm
leaders I met from NSW were always of the opinion that
there was nothing wrong with the old system, nothing
wrong with the way AWB ran it and were remunerated, and
that AWB did nothing other than maximise returns to
growers during the period that AWB managed the single
desk after AWB was corporatized.
My view is that the single desk model under AWB had
become suboptimal and did need to be changed. If the
NSW group had recognised that, instead of refusing to
acknowledge that last year, they may have made some
progress on retaining a single desk system. It is now
simply too late.
Their fear about competition lowering prices for farmers is
not logical either. If someone is offering you a lower price
than someone else for your wheat, will you sell it to them?
So why will multiple buyers result in lower prices?
Their theory is that multiple sellers of Australian wheat will
result in lower prices being achieved in the export market,
thus leading to lower prices for growers. Does not make
sense to me.
Take four sellers and four export markets. Seller 1
undercuts everyone in Export Market A and gets the deal.
If Seller 2 gets a deal in Market C which is at a better price,
then Sellers 1 and 2 come back to Australia to buy their
wheat. If seller 2 can post a higher price, they will to make
sure they get their wheat. If seller 3 then gets a higher price
in Market B, they will be move competitive and post prices
better than Seller 1.
To make themselves attractive to growers, wheat exporters
will have to maximise the prices they get in export
markets, not minimise them. Then we need good, strong
competition between buyers accumulating grain for export
orders, to make sure that as much as possible of the export
sale price is captured by growers.
If growers keep themselves fully informed on who is
offering what price, when and where, and do not sell to
buyers with low prices, having multiple sellers of wheat in
export markets will not lower prices to growers.
Grain traders wanting to buy wheat in Australia have to
make themselves as attractive as possible to attract you to
sell them your grain. If they do not, you won’t sell to them
and they go out of business. The power is in growers’
hands.

Further to the points that are made in the CALLUM DOWNS COMMODITY NEWS - Grain Report 3/06/2008 by MK & MA Bartholomaeus make in this quote... I would add this:

International Grain Companies have NO INTEREST in blowing the bottom out of the wheat market... as they themselves have mega investments in inventory that will be lost if this occurs.

Single Desk proponents use this argument... BECAUSE this is the very tendency the sole marketer themselves get sucked into... and if they operate in a pool pricing system... the grower takes the loss on a deferred pool base in a non-transparent base... that can not be detected for months after the single desk gives the grain away.

I am NOT going to willingly take a loss for the sake of selling lower... in fact I will try to raise the price... to make my margin better and make more profit.

As long as there are multiple buyers in a market... and I am allowed to sell to the highest market... strong holders of grain inventories will put a bottom in the market... and it will RISE... not fall.

Canola is the perfect example... and Peas/Lentils show the same tendencies... especially when the inventory is short!

hERE WAS THE cwb'S OPINION ON THE 07-08 market... in Feb/07:

PRO Commentary
2007-08 crop year
Wheat
World wheat production is expected to increase significantly in 2007-08, as Northern Hemisphere winter-wheat growers have responded to the market signal to plant more wheat. In addition to increased area, winter-wheat crops in Europe, the Black Sea region and the United States have progressed well during the winter months. Although global wheat carry-in stocks are tight heading into 2007-08, new crop supplies will cause increased competition on world wheat markets in late spring 2007 and beyond.
Durum
Durum supplies have diminished throughout 2006-07. North Africa, and specifically Morocco, has been dry for the past couple of months. If this dryness continues through March and April, it is expected to lead to increased import demand. Tight North American stocks mean that, even with larger production, stocks will tighten in 2007-08. The market will be sensitive to any production or quality problems.

#1CWRS 13.5 $220.00/t #1 CWAD 13 $235.00/t
http://www.cwb.ca/dom/db/contracts/pool_return/pro.nsf/WebPRPub/2007_20070226.html?OpenDocument&CropYr=2007-08


Who could logically argue that the CWB was actually doing anything but undercutting the market... by making this report public?

How can the likes of Rod Flaman tell anyone the CWB pool made us any money... when it was the opposite that actually occurred?

The CWB stole 100's of $$$ millions out of 07-08 PPO contracts... and in wheat would likely be in a pool deficit RIGHT NOW...

IF they didn't steal the money out of the contingency fund and from FPC contracted grain!

They are also taking 08-09 basis funds right now... to pad the 07-08 pool!

CWB Risk managers that sell all the PPO grain to the pool... and pool all the futures positions... have no coordinated book to tell what they are actually doing!

[cropduster]

T4......Does this include the 29mln screwup???

[TOM4CWB]

Cropduster;

Which one of the MANY $29m messups are you talking about?

[Hopperbin]

I totally agree with you Tom.
The CWB thinks we are like machinery manufacturers. They offer their product at a certain price and often a dealer with the lowest price gets the sale but at the dealers cut rate. We are not dealers, we are producers and we do not sell our grain unless we say "SOLD". And that selling price is 100 percent at the highest price we can find. "SOLD" at the higher price.
Not sold to the grain buyer that can sell my grain first at the lower price but to the grain buyer that can bid the higher price.

[furrowtickler]

Tom I totaly agree with you on this, funny - No pro borg suppoters signing in? Must still be seeding, or trying to control the farms ops from the old folks home!

[parsley]

It's always about the money, tom4CWB,

How to get a piece of your money. And you lost a wad of it to the CWB.

Even when you really wish it wasn't that way,( and most of the time a person goes into denial by trying to be positive), once you take a closer look, it's always about the money.

And a person gets blindsided by it...by both the people you believed in and put your faith in, signing up to what they claimed, and then taken to the cleaners by what they did to you. They knew full well it was a going to be train wreck, right from Day #1, but it was the money they needed. They had a plan from the beginning. These folks never go out dressed without a plan.

It eats at the heart as well as the pocketbook.


Parsley

[TOM4CWB]

Parsley,

It is the heart of this problem... that kills the spirit of so many younger folks who will not be a part of our grain sector... because of the simple lack of respect for each other.

This is what hurts so much... that a neighbour would vote to kill the spirit of my family... so they will not grain farm because of this evil selfish attitude. The CWB as it stands today is a perfect example of evil that tells a deception at every turn... NEW is really the same old trap... choice is really double speak for a trap.

This evil the CWB spews ... rots us all... those standing on both sides of the sickness that justifies folks... sticking their nose in places it does not belong!

The Justification of the CWB single desk (and forcing me into supporting this religion) is no different than telling everyone they must believe Islam and support it... of join the Communist Party.

[parsley]

A Plan by the Man with the Bored

(Sounds like a dumb book title)

-A brainwave strikes the Bored man.
-Plots in the Bored's backroom
-Plans are self-serving
-Makes Bored promises
-Has no intention of keeping Bored promises.
-Wants cash, or what can get the cash(ag information,for example, or even steppingstone to something bigger and better).
-Could care less about Tom4CWB or your family.
-Tells you anything at all to make the plan workable and presentable, and changes it at whim. Daily if necessary.
-Feels/acts superior.
Yup

Parsley