Today's Golden Parachute goes to...

[TOM4CWB]

Highwayman,

You got it right!

We have been growing grain since 1881 in the Edmonton area... take a look at Aug 1/12 prices for CWRS2 13 -AT- the local elevator...on June 28/12 was $7.82/bu and 2CPS 11 was $6.86/bu.

Add $52/t and the spread to a #1 13.5... maybe(18/t) ($1.90/bu) to port and this is the highest price we have ever been offered the old CWB way!!!

$9.72/bu is nowhere to be found port prices (1CWRS13.5) at the CWB that I can find... and they are begging for GDC wheat... I wonder why they will not pay up... as they still have a monopsony for one more month...

Or have I missed something grassfarmer?

Hedgehog is 100% right on.

[hedgehog]

i dont think that many farmers in europe are aware of how the cwb operated, and would be astonished to know the truth.
i understand now why canadian land was so cheap, with the cwb squeezing the life out of growers.
i just hope you get all your assets returned.

[grassfarmer]

The two Canadians argue again how they feel the CWB
influenced wheat prices in western Canada - but read
again - the other foreigner said how the CWB lowered
prices all over the western world, and globally by
selling poorly.
Where is the proof of this ridiculous statement? Lets
hear how Canadian wheat exports of around 12
million tons a year lower prices in a world wheat
market of over 600 million tonnes. I'm sure wheat
farmers all over the world are waiting to be
enlightened.

[oliver990]

grassy, my family lost lots of relatives trying to liberate Europe in WW2 when it was over we not only lost brothers cousins and neighbors but our own freedom of our property. our grain being exporpiated by the BNA act to rebuild Europe. get over it move along Grassy, by the way the $300 is small price to pay to eliminate "The Designated Area" phrase from our vocabulary.

[jdepape]

Grassfarmer:

Everyone in the market has an impact on that
market - whether it's by doing something or doing
nothing. Clearly, the bigger you are in that
market, the bigger the impact.

A few years ago a senior trader at a large
multinational firm that buys a lot of wheat once
told me that, anytime they decided that they
should "own" wheat under the current market
conditions (in other words, get long) they would
always buy from the CWB first. This was because
they knew that they could buy ship-loads of wheat
from the CWB and the market wouldn't feel it (the
market wouldn't rally on the fresh buying).

If they bought these large amounts from anyone
else, or in the futures market, the price would rally
and they would end up paying more - not just the
wheat they were buying at that time, but possibly
later purchases as well.

And think about this - the CWB often bragged
about how it could sell large amounts of wheat in
far out deferred positions when the "trade"
couldn't. But what it never realized was that, by
selling the way they did, the market didn't get a
chance to rally higher on the strength of the
buying, so subsequent sales by the CWB would
be at lower prices than they should have been.

Oh yeah - and that means everyone's prices
would be lower than they should have been.

We have always known the CWB would undercut
its competition - sometimes seriously undercut.
More evidence of this is starting to emerge from
offshore buyers now that they can talk openly.
Ironically, the CWB used to complain about the
AWB doing exactly the same thing - the CWB
didn't like it because it drove prices lower. Point
here is that whenever you don't need to be
concerned about your cost (what you're paying
farmers), you can sell at prices lower than those
who have to buy AND sell.

It has always been argued that the CWB distorts
markets (which, more often than not, means
lower). The CWB always denied that, yet they
also always said they "price discriminate". This
supposedly means they sell into high priced
markets and low priced markets simultaneously.
They argue that this keeps the high priced
markets high. But as they try to clear high quality
wheat into a market that won't pay for high quality
(at lower prices) this has a depressing impact on
those low quality markets.

Yes, the CWB distorted world markets, but how
much that meant lower prices for farmers
elsewhere would be difficult to measure.

[blackpowder]

jdepape; not sure you understood my brief sarcastic posts, but I agree with everything you're saying because I know them to be true. Your not the only one who could go on about the BS. I know it's easy to show my chip when I hear something really stupid.
The $350m plus whatever else is a damn cheap divorce settlement!
By the way, I just signed a basis contract Nov delivery, off Dec futures.
NO MORE piles into winter!!
NO MORE hauling wht to the field with a manure spreader because I could'nt get 'permission' to sell it!!!
The basis was very competitive. Far more friggin net than the cwb!!
Taxpayer support of Churchill was a Cold War thing for pete's sake
The gawdamn nightmare is soon just a memory!!!!!!!!!!!
People who worry about the next guy making too much money slowly get paved over!!!!!!!

[hedgehog]

it only takes one poor seller to f*** a market for the year.

weak forward sellers depress the market everywhere, due to bank pressure or whatever.or cwb trying to grab market share.

loads of 2012 uk wheat was sold pre xmas at way below current terms.
although the world produces a lot of wheat there is really not a lot traded, and until russia started exporting , canada was no 1 exporter globally i think.

[jdepape]

Blackpowder:

What was your basis?
Off Minneapolis I assume?
Was it in Canadian dollars or US?

John

[highwayman]

This CANADIAN is god damn proud of this
country and it's leaders with conviction who had
the balls to give Western Canadian farmers the
freedom they deserve. Grass, I'm sure mr mulcair
will have a place for you and your NFU socialist
crap in his Eutopia of Quebec. It seems your
views will align quite blissfully. GOD BLESS
CANADA on this wonderful day and those who
truly appreciate this beautiful country.

[TOM4CWB]

Grassfarmer,

I was ASTOUNDED last summer to see the CWB prove John's point. Dumping wheat into perfectly fluid markets... at $50/t UNDER that market. On the CWB power point... in Camrose AB.

Hedgehog is 100 percent right... this did stop our land prices from rising... you won't be surprised to hear the land prices HAVE increased over 25 percent in the past year... the CWB DOES have something to do with this... wheater you are willing to admit this or not!

Happy Canada Day!

God Bless Canada!

Even the Brits House of Lords knew the CWB was good for lowering wheat and barley prices... in 1951... when they OVERTURNED the SSC ruling that was supposed to be giving back grain to the proper owners... Instead the CWB 'Monopsony' got to keep it... and keep selling Great Britian cheap grain.

Overturning the Supreme Court of Canada ruling... by the House of Lords meant the CWB had more legal might than the CDN Gov. Now you know why we were so afraid Minister Ritz was going to be sent sideways... in his quest to end the monopsony.

I will GLADY pay my portion... to give whoever is needed whatever is deemed needed... to end this travesty of justice... the CWB single desk.

Long live the Voluntary CWB... I hope they get it together and start offering fair prices for our grain... All types of grain!

Cheers!

[TOM4CWB]

Hedgehog... take 15 minutes and watch this YouTube from Camrose. The Single Desk prices start a few minutes in after producer cars and trucking premiums.

The Condensed version:

High Quality CWRS...

US sales 1mmt @ $248/t

Japan sales 835,000t @ $326/t

UK sales 429,000t @ $321/t.

Why on EARTH did the CWB Discount sell into the US market... at $75/t UNDER world market prices?

Check out the 15min video:

Camrose 2011 Mtg August

[hobbyfrmr]

Agree with highwayman and like furrow,yuuuup.
I will pay the cost so the CWB can just get gone.
Organically they were costing me $12,000 to
$23,000 per year in buy backs. A phone call, and
a fax form with my visa number on it, quite
unbelievable really.

[TOM4CWB]

The CWB's idea of 'perfect' marketing... about as real as this wheat farm video!

Have a look! The Automatic wheat farm!

[blackpowder]

jdepape:
Rather reluctant to share actual basis for a few weeks. They are very new. It seems all companys post basis, but some have an internal daily trade? I placed an order just under what was being used internally and it was grabbed 3 days later.
Tried to do the other half at competition. Basis contract there would as of yet would be a 'one of'. Target price contract for basis was flatly cancelled by their head office later that day, told to 'dream on' at my price.
Can be more specific later.
Essentially C$/Mt subtracted from Minn. 1s and 2s 13.5px or better. Of course no quality spreads known.
Will of course confirm all this with respective buyers Tues am. as some of this is coming from texts etc.
Sounds like I was the first at either elevator to do these. Also the first on Friday to forward price a load of Malt bly. Can be fun being first.
Also, if wanted any info on CWB contracts told to "phone em yourself!" Their priority after themselves would be cwb pooled grain not priced contracts. Frosty 'tudes already!

[jdepape]

Blackpowder:

There are a number of ways to do basis against a
futures contract that trades in US dollars.

I gather for yours - in tonnes against MGEX - you
take MGEX futures (in bushels) and convert it to
tonnes, then subtract the basis (in tonnes).

You said it was in Cdn dollars/tonne which means
either you convert the futures to Cdn dollars
before subtracting the basis, or you simply
subtract the basis from the future and the result is
in Cdn dollars (which is what they do in Ontario
with corn and soybeans).

If its like in Ontario, you have foreign exchange
risk in your basis. If nothing at all changes in the
global wheat market but the Canada/US
exchange rate changes, the current market basis
will change. Canadian dollar weakness will mean
basis strength (better basis for a seller); CD
strength means weak basis. So, your basis may
seem good now but if the CD weakens (which
some are projecting) it won't look as good.

If you locked in this basis so that all you have to is
watch futures, you may want to keep an eye on
FX as well. Or you can step into the FX mkt and
hedge that portion to get a more conventional
basis contract that reflects local supply/demand
issues.

Not trying to preach - but I am quite interested in
how we transition into the new market. If we use
US futures, it will be more complex than we are
used to. If we can help ICE futures succeed, it
will be much less so.

If you want to chat about this, drop me an email at
john@depape.ca