2004-05 PRO

[crusher]

Minni Dec wheat keeps inching up and the dollar is sliding a little. Interesting to see what the FPC will be. If basis is normal, I get $4.85 net central Alberta - not Canola values, but I can work in a profit at that price.

[Incognito]

From Reuters:

U.S. wheat growers, traders and shippers must become more consistent in meeting the quality demands of Asian and Latin American buyers to compete effectively on the world market, wheat industry leaders said on Wednesday.

"We do really have to focus more on quality and consistency of quality," said John Oades, vice president of U.S. Wheat Associates, an export promotion group.

Oades, speaking on the sidelines of a U.S. Wheat Quality Council meeting in Kansas City, Missouri, said American wheat players must embrace quality targets for wheat classes, rapid testing at elevators for quality, and adequate segregation systems, among other steps, if they want a significant share of fast-growing flour markets for Asian noodles and Latin American tortillas .

"It is in the hands of the entire industry," he said.

The drive for control over distinctive characteristics, including hardness, color and texture, has emerged over the last decade as trade agreements have led to direct negotiations with overseas millers rather than government buying agencies.

"The market has changed," Wheat Quality Council board member Mark Hodges said in an interview.

Hodges said that a decade ago U.S. wheat promoters had one government buying agency to deal with, in Mexico. Now they negotiate with 96 different mills in that country.

"That is a drastic change. It's gotten much more complicated. We can't compete as the low-cost provider, so if we don't have quality we don't have anything," Hodges said.

China, which has emerged as a significant U.S. wheat customer, does not yet have the same level of specific quality demands as do Japan, Mexico and other buyers, Oades said.

Still, it is uncertain how much wheat China will be buying from the United States over the long term, he said.

_______________________________________

Some thoughts before I head to bed before my family thinks I am totally off the wall for taking this industry too seriously:

1) We had a system in place to segregate and IP wheat 25 years ago and we knocked em down.

2) The importer wants at the farmer. Not totally because he thinks he can buy grain cheaper but because he wants smaller lots of higher quality grain

3) 20 years ago the drawing area for grain delivered to a local elevator might have been 40-50 miles, tops: today it is 200-300 miles making the milling characteristics uneven before everyone starts blending to the line to ensure they make a profit.

4) I used to watch the CWB allocate cars to vessels from all parts of western Canada to ensure the customer received what they wanted. Can't do that in this environment.

The current system we have in place is not conducive for high quality grains.

Witness Marubeni and ADM's agreement to work toward IP grains to control quality.

Quote:

This will utilize the strength of ADM’s infrastructure to meet the strict standards of identity preservation required by consumers in Japan.”

Unquote

What are we doing as a country, industry and grower to change to this new environment?

[Incognito]

Boone:

seperstion?

You had me scrambling to Merriam - Webster and I still couldnt find it?

[boone]

incognito: Well maybe the Rogets thesaurus. Sorry about that but when my old decrepid hand slide past 30wpm my separations become sepersitions. Noticed it but after reading all these articles lately about how unnnnnecesary it is to spell words crecortly I said let it pass. Anyway I'm thinking charliep must have had a good holiday or his Viagra shares (wink nod) are coming through for him cause he seems to be firing on 8 cylinders with some of these posts here, Good Work. Anyone feeling good about the canola they sold on the 25th of Feb. Basis is widening and the americans have announced there would be no threat to their own beans if SA beans and or meal came in. Nice run anyway, hope it can firm Nov. into 385.00 territory. Notice it faded less tonight then Jan.Mar. Commercial are pressing retail hedgers(farmers) like Nov. any thoughts?

[Incognito]

It really depends on the SA crop. Quietly the USDA was nattering 62 MMT so it was no surprise that they went to 61 MMT for Brazil. A lot has changed since the last WASDE and i think it won't break either way until the next USDA report.

The WCE canola contract is discovering where farmers will sell - not the price of canola or canola oil.

[TOM4CWB]

Incognito;

At least those who needed $9/bu canola had a chance to get this price.

Those who could afford to sell at $8/bu sold and allowed the market to get to $9.

Same with the soybeans.

The CWB plan to give us all the lowest price... as the 04-05 price clearly dictates... offers no "premium price" for anyone in Canada.

The CWB can wipe out the Ontario Wheat Board in one year if they feel like it.

A marketer with no cost of sales (the CWB)is the biggest danger to any market!

[Incognito]

One question i had earlier was how many farmers were forced to sell canola off the combine because wheat was 2.50 and barley was 50 cents - i know Boone - it will be better - but cash is king and bills have to be paid.
I wish i could talk some MBA writing their thesis to tackle this question.


I am really disappointed with the CWB the last two years. They gave farmers the tools to become better marketers, forgot about educating them about the options and then failed miserably versus the rest of the world marketing grain.

How much market intelligence does it take to sell 1/12 of the crop in each month?

[TOM4CWB]

Incognito;

This is a real problem.

Which 12 months?

When a grain purchaser wants to buy, does the CWB sell and rehedge the sale to create the 1/12 per month?

I know the CWB really pushes domestic forward sales to millers... up to a year ahead. How does the CWB risk manage these sales?

When I buy inputs for my production, I try to pick the lowest price possible... is this not the case with grain purchasers, as I believe it is, how is the CWB handling the risk management of these transactions?

It is VERY obvious in 02-03 that the CWB got caught pre-selling too much...

In the Oct 02 "Update from the CWB" the CWB said:

"The CWB has not this year's entire crop at last year's prices." (use of the word "entire" leads to... a good portion?)"We have been a cautious seller of wheat and barley since the spring when drought conditions first became evident."(Before the drought was "evident" the CWB were strong sellers of the 02-03 crop?)

The resulting prices from the 02-03 pool tell the real story.

Now we must all pay, again... for the 02-03 blunder... in 04-05... Low PRO's, an election in the fall of 04... and all the political baggage that comes with this federal and CWB election.

[TOM4CWB]

I missed sold in the CWB quote;

"The CWB has not SOLD this year's entire crop at last year's prices."

[boone]

Post:I get up every morning and hope we have to eat our words here. But I did that in 2002 and I got the wrong kind of 'A Belly Full', God help us if Toms notion is correct. No one markets well under the gun, but this would be a travesty.