CWB on malt barley... dump it and sell as feed...

[TOM4CWB]

Charlie,

I have heard numerous reports by barley growers this week...

That the CWB is expecting malt barley growers...

To deliver about 1/2 their malt into the feed market... at approx $3/bu...or... save till after Aug1/09


As there is too much malt...

and there must be a reduction in Malt supply...

For the CWB to retain market power and a premium...

Strange how the US malt price is rising again... I am told now way over the best of CWB contracts...

So why is it that the CWB 'single desk' protect everyone but the grower it was supposed to get a premium for in the first place?

[Burbert]

The HUGE barley crop grown this year, may cause some blips in the system. Cheap cow food is always in demand, however and the barley crop will likely get chewed up. Guess that the excited states, is getting thirsty for a cheap drink, ie beer, hence the malt price goes up. The CWB should be blamed for everything bad in agriculture I guess!!

[Zaphod]

I was talking to a barley trader yesterday and heard a couple of things. He said that there was a lot of good quality 2-row and 6-row barley this year. I was kind of surprised by that. What was even more interesting was that he said a vessel of barley had recently been sold to China as "feed barley with a germination spec". So the CWB can't even get malt barley prices, they have to knock it down to feed to make a sale. How's that for a premium marketer? It's clear that they are simply a price taker.

[Zaphod]

And a bad price taker at that. No market power of any kind.

[charliep]

Current European malt barley prices are about USD $175, than is down from highs of over $450/tonne this past winter. US prices remain higher with Montana malt barley selling for about USD $24/tonne.

That puts the CWB in a real problem. Choices are keep the pool malt barley pool small/payments up or expand volumes/risk a deficit.

Curious on the availability of CWB CashPlus for malt barley/price. What is peoples experience? My preference is to go this way on malt sales if possible (likely not in the current environment) - I would money in the bank versus a promise.

[charliep]

Oops. Forgot a zero on the Montana prices. Should be USD $240/tonne (USD $11/CWT)

http://www.ams.usda.gov/mnreports/bl_gr110.txt

[mcfarms]

Charlie
Haven't seen any more 08 cash plus have however seen a 09 cash plus price. Off around 20 or so percent from this years high cash plus offers.
That said canola is currently around 39 percent of it's highs and wheat is what 50 percent off its highs?

The maltster I deal with says they are fully selected for this year and I'm assuming all domestics are in the same boat so any further business will be export in nature at lower values.

As I've said for a number of years in a crop like malt barley a pool which encompasses sales made in some cases over a 18 month period cannot truely send market signals to the producer and is a mistake. Cash plus has the potential do offer a daily or weekly price but it sends a muted signal due to it's design.

[charliep]

Thanks mcfarms

I checked and no fpc on malt barley.

Would use the epo alternative (90 % although 100 % could be considered) to increase cash flow ($30 to $40/tonne more in your pocket) and protect against downside on the CWB malt barley payments.

[TOM4CWB]

Charlie,

The great lottery system must end!

Contract production is key... and the CWB wants the best of both worlds... as do the malties... without having to pay.

THIS IS WRONG.

SIGNALS must be sent... so folks don't gain unrealistic expectations in the spring... and grow and spend to produce malt... with no market on the other end.

THAT IS NOT FAIR.

Transparent market signals are key.. to the proper allocation of resourses.

Hard to understand how US growers are offered so much more for cash malt... what does that say about their marketers in charge?

How can the CWB possibly claim to be a premium marketer... when they do the opposite so many times.... and just discount?!!!

[chaffmeister]

Some price comparisons (offering prices in USD, basis origin):

Aug 1
EU.......US$315
Aussie...US$317
CWB......US$370
PRO......CD$360...(US$351)

Sept 1
EU.......US$285
Aussie...US$282
CWB......US$350
PRO......CD$348...(US$326)

Oct 1
EU.......US$229
Aussie...US$238
CWB......US$320
PRO......CD$335...(US$315)

Oct 29
EU.......US$175
Aussie...US$160
CWB......US$280
PRO......CD$327...(US$266)


Sure looks like the CWB is doing a good job for farmers - getting those premiums. In Aug they were about $50 over the competition, now its up to about $100. (And with ocean freight so cheap now, the freight differentials are too small to worry about.)

Isn't it interesting that the CWB selling price is always just over the PRO (in USD)? Perhaps they're more interested in protecting the PRO than actually making new sales.

One problem with this strategy. How much can they be selling at these prices? Watch for even lower malt barley prices and poor uptake (a small pool).

At these prices, EU barley is cheaper than Western Canadian barley shipped into Eastern Canada!!

Which is better: high prices with no sales, or lower prices and good sales?

[Hopperbin]

Chaff and why should the CWB be allowed to make that decision to lower feed price for some and improve malt price for others. In the past the CWB called poor malt prices "market buiding" So should we now call this "market destruction"?

[bgmb]

Here is what happened in the malt market this year.

1) CWB allows maltsters/grain companies to come out with contracts to tempt farmers to grow malt with high prices.
(These contracts are essentially an option to buy for the maltster)

2) Farmers overwhelmingly sign these contracts with min prices in the $6.00 range. Seeded acres are huge.

3) Maltsters now have their pick and in most cases choose not to select the high priced contracted barley and instead take other uncontracted barley in the pool.

End of story

But i`m sure you can find a way to blame it on the CWB Tom