Canadian wheat 'too expensive'

[charliep]

I would question whether either Europe or North America are the factor flooding the market as you call it. I note that former Soviet Union are increasing market share at the expense of the traditional wheat exporters (particularly North America). Ukraine, Russia and Kazakhstan will make up about 34 mmt of wheat exports this year. Combined Canada and US wheat exports (USDA numbers) are likely to be about 42.5 MMT. The new wheat world you live in.

[URL="http://www.fas.usda.gov/psdonline/psdreport.aspx?hidReportRetrievalName=BVS&hidRepor tRetrievalID=386&hidReportRetrievalTemplateID=7"]USDA World Wheat Trade Eastimates[/URL]

[Fransisco]

Okay gapper you want to rumble, lets rumble.

Enough with comparing meaningless PROs to actual spot prices lets go apples to apples.

CWB Fixed Price contract today for 13.5% spring wheat with standard Manitoba deductions of $1.45 per bushel comes to <b>$4.71</b> per bushel Canadian.

http://www.cwb.ca/db/contracts/ppo/ppo_prices.nsf/fixed_price/fbpc-wheat-2010-mhrs-20100507.html

New crop spring wheat 14% protein(which is the same as 13.5% in Canada)in Berthold ND for December delivery is $5.08 USD

http://www.bertholdfarmers.com/index.cfm?show=11&mid=26

Today's exchange rate is .9587

http://www.bankofcanada.ca/en/index.html

Which means the price of new crop wheat in Berthold in Canadian dollars is <b>$5.29</b>

The open market price beats the wheat board by .58 a bushel.

And no there doesn't need to be any trucking charges subtracted because if we had an open market the price would come to us. Manitoba and North Dakota are the same distance from ports for export.

On a 1/4 section of land averaging 55 bu per acre that's $5104.00 more for the open market guys than for the wheat board guys.

That's what the wheat board is costing us today in real in your pocket dollars.

[highwayman]

Ask yourself this gappper. If state trading organizations ,the likes of the CWB, are such wonderful and prosperous things for producers and continually achieve premium prices for those forced to participate, why isn't every intelligent grain producing nation running to copy this same marketing system? And if you can't see how the CWB continually distorts markets with it underacheivment then it is clearly you who have your head in the sand. If one could market wheat and barley to individual needs do you really think every other grain,pulse and oilseed market in western Canada would see the price pressure they do now? Not likely!

[stubblejumper]

About test weight for Canadian grains
The following information answers questions about test weight and how grain volumes are measured and describes how grain is measured for test weight in Canada.

Did you know?
Different grains have different densities. As a result, all different grains have different conversion factors.
On this page
What is test weight?
Importance of test weight
Imperial, Avery and Winchester bushels
Converting to Winchester bushels
Conversion factors and different grains
Test weight contacts

What is test weight?
Test weight is the measure of grain density determined by weighing a known volume of grain. In Canada's grain grading specifications, it is expressed in grams per 0.5 litre or kilograms per hectolitre. Test weight is a grading factor for many grains under the Canada Grain Act. Despite the name, test weight is not a measure of weight or quantity, but is a measure of density (a measure of mass in a given volume).

In the current Canadian grading system, test weight is assessed after dockage is removed and is expressed as kilograms per hectolitre, kg/hL (kilograms per 100 litres of volume), or as g/0.5L (grams per half-litre). This is the official measure in Canada, and the Official Grain Grading Guide issued by the Canadian Grain Commission specifies minimum test weights required to make grades for certain grains.

In Canada, producers commonly refer to grain weight using Imperial (British) measurement. However, the Canadian Grain Commission uses metric measurements, which can then be converted to Avery and Winchester bushels. Both Avery and Winchester bushels differ from the Imperial bushel.

The importance of test weight
A bushel of wheat in Canada may not be equal to a bushel of wheat in the United States. The Winchester bushel volume is smaller than the British bushel volume that is used to calculate the Avery bushel used in Canada.

In addition to the difference in volume, there is a difference in how the effect of grain compaction is treated. In Canada, determining test weight takes compaction into account, and conversion of the official metric test weight measure to pounds per bushel is based on the Imperial bushel, and is referred to as pounds per bushel-Avery. Conversion of the official metric test weight measure to pounds per bushel based on the Winchester bushel does not take compaction into account, and is referred to as pounds per bushel-Winchester. Therefore, it is critical to make sure which type of bushel is being used when making formal grain transactions.

If you are selling your grain by contract to a company in the United States, test weights specified in the contract are in pounds per bushel. Usually, this means the Winchester bushel. However, if you get a test weight measurement for your grain at a primary elevator in Canada, it will be in Avery bushels. The difference between the two bushels could mean a loss for you.

Example: If the contract for Select CW two-row barley specifies a test weight of 45.5 lb/bu, this means that it is 45.5 pounds per Winchester bushel (45.0 lb/W bu). The equivalent test weight in the test weight conversion chart for barley is 48.8 pounds per Avery bushell (lb/A bu). Therefore, any shipment of barley with a Canadian test weight of less than 48.8 lb/A bu will not meet the United States contract specifications.

Conversely, the Canadian test weight of 45.5 A lb/ bu is equivalent to 42.4 lb/W bu. so will not meet a specification for 45.5 lb/ W bu.

Imperial, Avery and Winchester bushels
The Imperial bushel is 36.369 litres (or 1.2843 ft3). It is the British bushel and is commonly used by Canadian producers. In the table below, the figures showing conversion to Imperial are approximate values.

The Avery bushel is the Imperial bushel, but the weight conversion accounts for grain compaction. It is in use in Canada.

The Winchester bushel is 35.239 litres (or 1.244 ft3) and is in use in the United States.

The following table shows how these measurements differ in reference to test weights of specific grains and grades.

Measurement in: g/0.5 L kg/hL lb/Imperial bushel (approx.) lb/Avery bushel lb/Winchester bushel
Special Select Canada Western two-row barley 303 63.0 49.1 50.5 47.0
Special Select Canada Western six-row barley 298 62.0 48.3 49.7 46.2
No. 1 Canada Western Red Spring wheat 365 75.0 58.2 60.1 56.6
No. 1 Canada Western Amber Durum wheat 387 79.0 61.5 63.3 60.1

Converting to Winchester bushels
Conversions from grams per half litre to pounds per Winchester bushel involve a straight mathematical conversion. The conversion doesn't account for grain compaction because the weight per small volume is simply multiplied to reach the larger volume. The same conversions are used for each crop.

Example: This range of conversions is the same in all the tables.

Sample range of conversions g/0.5 L lb/W bu
291 45.2
292 45.3
293 45.5
294 45.6
295 45.8

Conversion factors and different grains
Different grains have different densities. As a result, all different grains have different conversion factors. When converting from grams per half litre to pounds per Avery bushel, there is no single conversion factor that can be applied to all grains.

Make sure to use the conversion factors and methods appropriate for the grain being measured.

Contacts
For more information please contact the Statistics unit

[Fransisco]

Round two: Market Share

Here is the latest CWB annual report

http://www.cwb.ca/public/en/about/investor/annual/pdf/08-09/2008-09_annual-report.pdf

On page 35 of the pdf, page 33 of the publication you'll find a pie chart on wheat. Canada produces a massive 4% of the worlds wheat, and controls an enormous 14.1% of global exports.

On page 36 of the pdf, page 34 of the publication you'll find barley and durum. With barley its 7.9% of production and 10.7% of exports.

If you think you can force the world price of wheat and barley higher based on this kind of market share you are seriously deluding yourself.

We actually have some decent market share in Durum 12.5% of production and 52% of exports. Yet, durum is one of the boards biggest disasters in recent years. It still hasn't managed to move the crop from two years ago for heavens sake!

[cityguy]

Fran's right in that the US buyer's aren't paying more than they have to - but then who does. They aren't paying full import values either. That being said, US wheat has never been more "uncompetetive" in the world market as it is right now. US market export market share is at a 50 year low (and I only went back 50 years). As Charlie pointed out, the FSU is the new market maker in the world market and if you want to get into some markets that will swing from one origin to another, then that's who you compete with. Point is that if in western Canada you want to have US type prices, then shouldn't you expect to carry over half your crop like they do in the US? That's the conundrum - you can choose to sell half your crop for full price, or sell all your crop for half (world) price. Unfortuntately for farmers, 423 Main has made the choice for you - sell the crop, start with the full price buyers and work your way down to the point that you're bouncing around in Bangladesh. Tuesday's numbers will be interesting to see how competitive the USDA feels US wheat will be competetive this coming year.

[TOM4CWB]

Cityguy et el,

ALL US wheat growers had the opportunity to sell 100% of their 2009 produced wheat/durum crops.

The CWB vs US wheat markets IS NOT at all comparing apples to apples. When the CWB has refused to sell wheat/durum that was offered for sale... this was VERY different than US farmers and grain owners choosing to hold wheat inventories!

When Canadians hold grain... refuse to offer it for sale to the CWB... then it is the same as US carryover.

Once again the CWB prices are the first to drop in North America. Highest quality; fastest to drop the price.

[Fransisco]

Round Three: Bushel weight

Stubble you raise an interesting and fair question. Is the bushel weight used in a US elevator the same as the bushel weight used in Canada?

Now from your post "In Canada, producers commonly refer to grain weight using Imperial (British) measurement" and for No 1 Spring Wheat that's (again according to your post)supposed to be 58.2 lbs. But that's not what we use now is it? We all use a 60 lb bushel.

1 tonne = 36.744 bushels at 60 lbs per bushel. Right? We all use these factors.

And guess what, that's exactly what they use in the States as well. Check out this link to the University of North Carolina where they show commercial bushel weights
http://www.unc.edu/~rowlett/units/scales/bushels.html

Here's another link to wikipedia. Notice how the bushel weight of oat's is different in the US than here, but for wheat it's the same, 60 lbs.

http://en.wikipedia.org/wiki/Bushel

Here's one more from the University of Missouri

http://extension.missouri.edu/publications/DisplayPub.aspx?P=G4020


Here's where I think the confusion sets in. A bushel is a measurement of volume. But the thing is, we don't buy and sell our grain on the basis of volume, we do it on the basis of weight. So it's not the volume that really matters it's what the weight is per volume. As long as its 60 lbs per bushel on this side of the border and its 60 lbs per bushel on the other side of the border we're still talking apples to apples.

I know, I know, clear as mud, right.

[Fransisco]

citiguy said, "US wheat has never been more "uncompetitive" in the world market as it is right now."

And yet it still kicks the crap out of the kind of prices you can get from the wheat board.

[hlg]

I believe he meant US wheat is over priced.