CWB 2003/04 Initial Payments

[charliep]

Initial payments as usual are interesting. I like to compare to the PRO and look at the relationship with initials. The initial is set off the June PRO but I have used the July here to make more relevant (not that big a change).

1CWRS 12.5 - Initial payment $130/t. PRO - $189/t. Ratio - 69 % base at port. Alberta based (subtract $44.50/t for CWB deductions) - initial $85.50/t. PRO - $144.50/t. ratio - 59 % in Alta.

1CPSR - Initial $100/t PRO - $159/t. Ratio - 63 % at port. Alberta based numbers: Initial - $55.5/t. PRO $114.50/t. Ratio - 48 %.

Canada Feed Wheat - Initial - $78/t. PRO - $126/t. Ratio - 62 % at port. alberta based numbers - Initial $33.50/t. PRO - $81.50/t. Ratio - 41 %.

1CWAD 12.5 % protein - Initial - $130/t.
PRO - $200.00/t. Ratio - 65 % at port. Alberta based - Initial - $85.50/t. PRO - $155.50/t. Ratio - 55 %

Feed barley - Initial - $80/t. PRO - $125/t. Ratio - 64 % based port. Alberta based ($47.70/t CWB deductions): Initial - $32.30/t. PRO - $77.30/t. Ratio - 42 %.

The most striking one to me is feed grains. The CWB is almost asking you to give it away at delivery with a promise of a final (one and a half times initial). Ever grain grower had better be hoping for good quality this fall and improved health in the livestock industry this winter.

[Muttley]

Sounds like a good idea, I'll thaw out the steaks tonight.

Don't tell Chretion or Vanclief they'll probably order chicken

[charliep]

As a note, the above points out a major flaw from using initial payment spreads in establishing price relationships between different classes, grades and proteins in the producer pricing options.

A note today is the CWB establishes your payment spreads at port using 1CWRS 13.5 as base. They have to get this process right as it is the base used when you deliver under the producer pricing options. After deducting the risk factors and deductions to get back to an local based initial payment, the higher grades recieve a higher percentage of expected total payements than alternative wheats/feed.

For those that are interested (there may be none) the risk factors are about $60/t for wheat ex durum, red winter and feed, red winter - $37 (will have to check to make sure initial is $118/t), feed wheat - $48, durum (1CWAD to 3CWAD) - $70/t, feed barley - $45 and malt barley - anywhere from $40 to $60/t. For those that want to check my math, the calculation is July PRO minus initial.

A way the CWB could get around this would be to announce initial payments (including spreads) at a known central Saskatchewan with adjustments to reflect freight differences for other locations from there versus Vancouver/St. Lawrence today minus freight. It would be similar to how some (not all) grain companies handle canola basis.

[TOM4CWB]

Charlie;

You have been "sucked in" by CWB word smithing on the CWRW.

A "Select" grade has the $10/t market development premium added to it already... CWRW with no protien is at $98/t, lower than CPS.

It is very interesting that the Market Development people at the CWB got taken by surprise on these initials!

I have a written document, from the CWB, that states the 03-04 1CWRW 11.5 initial (not select) was $114/t yet it was announced yesterday at $102/T

It sure looks like the feds are putting the screws to us, especially with the recent wheat rally of $20/t...

The fed reduced the initials below CWB recomendations (it sure looks like)... not made them better for farmers.

Only in Canada... is this possible... the worst of all worlds!

[15444]

Our town had our centennial tonight and tommorrow. Fed 3/4 lb. sirloin steaks for 700-900 people tonight! I guess we did our part!

[charliep]

Thanks for letting me know about CWRW. Has anyone else been having trouble getting into the CWB web site?

[almoy]

Tried several times tonight and couldn't get on the CWB site.

[Muttley]

A new bumper sticker was going around my town this weekend, it was I love Canadian Beef. It was I then a heart, then a maple leaf, then a cow head.

[charliep]

CWB site is working this morning.

You are right about CWRW - initial at port is $98/t or 63 % of June PRO. Alberta based initial would be about $53.50/t or 48 % of expected total payments. Margin for risk is $57/t.

Malt barley % of finals are about 73 % at port and 60 % in Alberta. Margins for error (CWB hold back if you like) are $52/t.

[kato]

I have seen a lot of that around. Where do you get things with the logo?

[charliep]

Any CWB huggers left around after the new crop year report. And after the old crop year performance at marketing our wheat and barley.

Present example of CWB inability to market our grain.

Montana Cash price for #1 DNS 14% Protein $5.40 Can./bus

CWB PRO for #1 CWRS l3.5 protein less freight and handling Alta $4.23/bus

CWB Asking Price St. Lawrence is $248/t or $6.79/bus.

I would assume that the asking price would be close to the cash price of the day at port position. That would translate into a cashprice on the prairies of $5.30 to $5.55 a bus. on a daily cash bases.

We as farmers are losing over a $1.00 a bus on wheat year in and year out by pooling our grain. Last year we lost as much as $3.00 bus. compared to cash pricing at the right time. I'am sure we all could have done better then the CWB marketers have done.

I also believe that the world price of wheat would be higher if single desk sellers like Canada and Australia would place their wheat on the open commodity market where buyers have to bid for their supplies instead of being garanteed a supply at an unbid price.

The CWB is also every good at telling the world how much and what quality of grain we have. If they want to keep a secret that would be one to keep.

P.S. Last year even on a very bad crop I lost between $20,000 and $30.000 marketing with the CWB. This year it is looking like over $80,000. Now would that help the agricultural society in Western Canada a bunch. Let see now 20 million tonnes times $40.00/t.

[charliep]

Just as a note, the CWB announced a program today that allows an 80 % early payment option on feed barleyand wheat. That puts initial payment at $100/t (port) and $55/t in Alberta. Margin for risk is $25/t. Percent of total payments based Alberta is 69 %.

As a note, 80 % of a crummy payment is still a crummy payment.

[charliep]

We need a cash price discovered by a bid process CWB or no CWB.

[charliep]

CWB directors need to realize that their not elect for being for or against the single desk but are elected to serve farmers to get the highest returns possible. That would mean developing a cash pricing system that a farmer can better manage his risk.

Having the CWB sell my grain through a pooling system is like letting some else look after my bank account.