New Normal

[agstar77]

HRS bid .50 /bus higher Southern Mb than Southern Sask. Very interesting.

[boarderbloke]

Agstar, what locations are you comparing?

[agstar77]

Winnipeg to Swift .

[charliep]

Is the new normal good or bad? The spreads reflect Manitba's distance from the Minneapolis milling wheat market and farmers ability to arbitrage US elevators if prices fall too far out of line. The CWB always adjusted prices somewhat through the Freight Adjustment Factor but the main spreads were based east west with winners/loosers in the pooling system because of this.

[charliep]

Will note that Manitoba feed grain prices were above Alberta for most of the 2011/12 crop year. Why? Because of the crop production disaster in the eastern prairies and the relatively tighter feed grain supplies. Not a bad thing. Just realities of the year. Markets do work when they are given the opportunity.

[boarderbloke]

charliep, our location in SESK was always close to the CWB midway line and we've seen some of the highest freight deductions, even though we're 30 miles from the USA. The FAF didn't come close to off setting the freight we were being charged, when grain was shipped south from Estevan or Weyburn. Since were not being charged freight to Thunder Bay, Vancouver or Churchill our basis has been 1/2 to 2/3rds what it was under the CWB, occasionlly better. I believe 1 yr the CWB had a USA gathering pool along the 49th parallel, from southern Mb to midway Sk south of the #1 highway, but the lower freight rates for that area didn't go over very well with the more northerly CWB supporters.

[agstar77]

And the 30c spread in Canola?

[charliep]

Price spreads in canola are very much demand based relative to closeness to crushing plants. Manitoba canola prices are not driven by west coast activity but by the plants in your own back yard and those to the south and east of you. Derek Brewin/Jannelle Mann at the University of Manitoba have done some really good work on this topic.

[charliep]

Direction challenged although realize canola crushing in Hamilton and Quebec. Meant to say west. Manitoba is in a good situation to fill all these crushing plant needs. Nice to have domestic processing capacity as your neighbor versus 100 % export demand. A dreamer would note increased interest for exporting durum off the west coast and heavan forbid, domestic milling capacity to turn durum into semalina and pasta. Way off your topic.

[agstar77]

There are durum mills springing up all over Sask and durum price is skyrocketing.

[gregpet]

Sadly that opportunity was lost because of the former CWB getting in the way. Who knows what the future will hold now.

[agstar77]

Some just can't face reality, that the grass is not greener on the other side of the fence.

[furrowtickler]

Reality is - most farmers here never in history made as much money off wheat as this year. Reality is the price of wheat was far higher - in world markets in '08. Reality is that for the first time in 60 years farmers actualy cash flowed hrsw and durum at high prices and guess what - the massive harvest selling, price did not collapse the market - huh? Reality is wheat is now a cash crop like canola and will be treated as such by those who can think outside the borg.....

[hobbyfrmr]

I have to agree with furrow. The transition to the
big, bad, open wheat market has been uneventful.
It would seem to me as though all the farmers,
line companies, terminals are doing the very best
they can with this opportunity. I am literally looking
for bad news to provide at least a little sliver of a
negative aspect to the change, but yet, so far I
cannot.

[charliep]

Kinda like January 1, 2000 and Y2K. Computers continued to work. The world didn't come to an end.