Feed Grain Confussion

[charliep]

Rain

You have asked a whole bunch of questions in different threads that needed to be summarized.

1) US corn situation. CBT Dec. 04 closed today at US $2.95/bu. Without going through the fancy math, this equates to a landed S. Alta. (track price) of about $175/tonne.

2) New crop basis. Untested because most feedlots are not willing to price that far out when they don't know how many calves they will have on feed six months from now.

3) Number of calves still being backgrounded and when they are placed on feed (or perhaps grassed). Timing of rains and impact on pasture condition. How many calves are born this spring and the ownership/feeding regime they will get this fall.

4) Barley acres seed this spring in this time of uncertainty. On black soils, the decision to go with CPS wheat or CWRS (keep the feed option open).

5) Whether the low forecast PRO scares farmers from growing malt (add in the not to pleasant experiences of selections/rejections over the past year) or whether people choose to play the lottery based on the philosophy the early PRO are conservative (a pleasant way of saying a pile of crap) and will increase.

Peoples thoughts on these issues.

[TOM4CWB]

Charlie;

Let me get this straight:

Crop Insurance expects a farm gate price of $2.50/bu.

US Corn conversion @175/t is equal to a fall price of $3.81/bu barley price.

The CWB is offering $125.80/t minus a basis of $44/t which brings a farm gate price of $90/t through a CWB contract.

$90/t is $1.96/bu for 04-05 feed barley that is heavier than 50lb/bu to the CWB farm gate.

How exactly can the CWB get away with offering this kind of price?

It appears this CWB type of offer (to "designated area" feed grain producers) just cuts the bottom 0ut of the feed market... not only domestically... but internationally as feed grain buyers see this "projection" on "cost" for feed grains a year from now.

Please explain HOW the CWB can extract a premium FOR us doing this?

[TOM4CWB]

Charlie;

Talk about a slap in the face for CWRW and CPS for fall 04. Kansas futures for March 05 are @$5.50/buCDN while Minni is @ $5.69/buCDN CWB quotes for Feb 27/04.

1CWRS 13.5 offering (Cash)price Feb 27 is $222.79/t (AB farm gate $4.81/bu)

1CPS Red offering (Cash)price Feb 27 is $186.94/t (AB farm gate $3.83/bu)

1CWRW offering (Cash)price Feb 27 is $181.64/t (AB farm gate $3.69/bu)

With the step up of 10% yeild on Superb, CWRS it is not far off the CPS/CWRW yields now.

However a $1/bu discount on CPS/CWRW kicks out everything but CWRS... and turns the prairies into monoculture CWB CWRS, no barley, no CPS, no CWRW.

Is this exactly what risk management APF expects of farmers in "new millenium" mangement of our farms?

[TOM4CWB]

Charlie;

I note @http://www.ontariowheatboard.com/Basis.html

2004 prices Sept, Oct, Nov;

Hard Red Winter is $5.02/bu
Hard Red Spring is $5.32/bu

Obviously this must be competitive with private bids for this wheat, with the new "market choice" structure in Ontario.

SO why can the CWB get away with what they are doing offering such terrible fall 04 wheat prices?

[boone]

Tom4cwb:Agreed it looks pretty dismall, but don't forget to start growing some seed (CPS) for Mr. Li's (Husky) new ethanol plant in Lloyyd. If your area and west-northwest can't do it profitably it won't be done. I've been told by truck drivers that they can't keep the big fertilizer sheds full so someone has a mad on to grow cheap grain.

[Incognito]

What do you think they will use of the 300-400K of product they will need in Lloyd?

[craig]

Tom just as a follow up on your Ontario Prices. Street cash prices for fall FOB the elevator at about $.20 to $.25 bushel more than what you quoted .
That's $5.25 for HRW base grade and $5.50 for HRS with about an additional $18.00 per tonne available for Protein Premiums. Almost looks Like an NEP program all over again. Not sure who were subsidizing in all this.

[TOM4CWB]

Craig;

Thanks for the reply (don't like to know but should) we have a long way to go to getting marketing choice!