SK wheat basis

[farming101]

The pop in MW is not trickling down to farmgate pricing in SK.

The chart uses the Sept contract till Aug 1, the Dec contract till Nov 1 and the Mar17 contract till present
Minneapolis prices are converted to CAD@75 cents and tonnes, taking into account the difference in bushel size (PDQ doesn't bother to do that and neither do the graincos(I guess it is in the basis)
SK avg price for most recent week not entered yet but looks like there will be no change in most areas. Will update. The oldest months are a little off because the dollar was 1 or 2 % higher for a while. A 76.5 cent dollar would narrow basis about $5/tonne



A more accurate FX and also changed the scale for basis so that it is negative

[bucket]

Farming101


No no no .....the exchange is in the basis. .....hello John depape. ...please enlighten Mr. Farming101.


The whole pdq is a crock of shit. .... go to a website where contracts can't be signed...every grainco sends texts everyday .....Viterra has an up to the minute app....and Yerry feeds depape 750k.....makes me sick....

[farmaholic]

101, I netted out about $246.20/tonne. Of course they stopped paying any protein premium at 14.5.............sigh, about 375 tonnes were higher out of 1120t, and didn't use it to blend up the lower stuff under 14Px--about 90 tonnes. But they bought the bleached wheat, about 120 tonnes out of 1120t total, at the same price as the good wheat... give and take. I give, they take...lol. I think I did Ok. And a good experience too, excellent driveway hours so we could get a fair bit hauled per day.

Seeing some better bids "loaded railcar" but that isn't easy either.

With Oz's decent crop do you think there is much upside to quality wheat?

[farmaholic]

........... and then there was durum!

[farming101]

Farma I think you did all right too.

I don't know when new crop Oz wheat hits the market in a big way but I think it will put a cap on things. The way Mallee talks they will be looking for places to put their crop
They do market to a somewhat different lineup of countries but there is overlap too.
2014 Aussie exports

[farmaholic]

It would be nice to see some sort of consistency as to how the basis is calculated. Even if it was off of Minni Wheat or what ever..... West coast quotes or "asking prices" are just that.

We would need a starting point whether that is the West Coast or Lake head east or Minni wheat. We don't have a functioning futures market for wheat in Canada so what would be the best price source to start deducting basis from..... and then everyone would have to use it depending on the direction the wheat is moving.... This is too complicated for this simple mind to unravel but something should be in place.

Any suggestions?

Its hard to complain about wide basis when comparing one buyer to another..... it's a signal they don't want it if it creates an out of the market price. We are in a new marketing environment, there will be signals.

Some one want to stick their neck out and calculate what you think is a "fair basis"? Based on what?

[bucket]

If freight is part of the basis then I guess the right place to start calculating is the port....?????


Current asking prices at Vancouver is 339 cdn per tonne for 1cwrs 13.5......9.47 a bushel.

So if current price at mid point sask is 6.50.....the basis is just a cool minus 3 bucks a bushel.....

Maybe it sounds better as a plus 50 cents a bushel from who the **** knows where.....

Why have a basis calculation that's transparent.....

[farmaholic]

What value do you assign to freight? Elevation and Handling, and all the other deductions off the value of a tonne of grain.

Ya it's no longer our grain when it's dumped in the pit but ultimately ever deduction is made off that tonne of grain in store port.

It's our job to extract as much of that port value as possible all while realizing everyone else who does their part gets "fairly" paid for doing their thing as well.

And no, I don't want to be priced in just above the COP. Its bad enough that profitability can be fleeting because of Mother Nature's wrath let alone not enough value filtering down to the farm gate. If it isn't profitable don't grow it? Profitable price point changes with quality and quantity.

[farming101]

I think you have to start with a futures market. It would have been great to have a made in Canada futures market take off but it didn't.
So, Minneapolis is the next best thing(the fx is likely the biggest drawback). The Grainco can use it and the farmer can use it. It works.
If you don't want to use it directly you can pay the grainco a fee and they will set up something for you to take advantage of future price changes. Of course you are then locked into doing a deal with them.
If a farmer doesn't want to use it at all at least he can check in and see what the market is doing.
The purpose of the futures market is to provide a place where deals can be made by all players. Is it perfect? No but the alternative is that more and more sales will be concluded behind closed doors and that is not in the best interest of the farmer who is trying to find out what a fair price is. See flax and durum for starters.

[bucket]

It seems at 6.50 for the farmer and 3.00 bucks everyone else gets is a little offside when you consider you don't get paid until all the risk is off the table and everyone is paid before their job hardly starts.....the grain commission has built in profits....as do the railways .....grain cos. ....the guys with the checkoffs.....etc etc etc.....all of which take their pound of flesh...before the slides are closed.....

[Guest]

what the f@&k is Depape getting paid for ?????

[farmaholic]

I wonder who has the biggest net margin for doing their part of the process?

How can you presell anything based on expenses when you don't even know what you will be required to do to grow it in the first place, then the actual bushels per acre based on incurred expenses come into play and change the profitability point. I guess if you calculate the full meal deal on expenses(inputs) and take an average yield, it should give you a "ballpark" figure.... but afew things can happen in a ballpark... home runs, base hits and strike outs! Step up to the plate fellas!

[bucket]

Caseih

That's a very good question....a end of day average of grain prices in different areas.....if I averaged my texted prices at the end of day....any spreadsheet would do the same thing....voila.....for my area....because I ain't selling grain in the peace river area. ...

[farming101]

7 years ago when the market was regulated the cost to market and get grain to port position was estimated to be $76.84/t. Works out to $84.10 today in 2010 dollars.

[bucket]

No one has tackled the job of actual freight costs after the consolidation of elevators and branch line abandonement. ....they are working on 1992 numbers.



There is no ****ing way with less points and larger trains that freight rates should be higher otherwise we may as well kept the smaller points and trains.....