Why Montana Winter Wheat brings $1.60/bu. more than CWB.

[wbrower]

I finally got an answer to my question, While the CWB directors at some of their recent Accountability meetings would not answer the question or infered that there really wasn't much difference. I had the pleasure of a discussion with Mr Schapansky in Lethbridge a couple days ago. After some wrangling he did offer that the reason Winter Wheat returns substantially more dollars to producers in Montana than the CWB pays Canadian producers is because the varieties grown in Montana are substantially higher quality than those grown in western Canada.

I wonder? Does this mean if we start growing Montana varieties of Winter Wheat than maybe the Board will close this $1.60/bu gap? I wonder?

[TOM4CWB]

wbrower;

Sorry to rain on the CWB's (Mr Schapansky) parade... but this "quality" issue is a real cover up to the basic CWB problem... pooling!

When in Edmonton at the Alberta Winter Wheat Producer's Commission mtg. we were told by the CWB's Andrea Hilderman (Program Manager, Market Development) that the CWB "select" varieties are of superior quality to US hard red winter wheat.

These varieties are:

AC Bellatrix, AC Readymade, AC Tempest, CDC Buteo, CDC Osprey, McClintock and Norstar

The CWB will pay $10/t "extra" for these varieties if the protein is over 11.5%.

This does not explain, at all, the $1.60/bu difference you experience, nor why when I delivered my CDC Osprey wheat I got no premium, after encountering $15/t extra cost (transport, storage, interest) and a further discount of $20/t less than feed wheat price delivered off the combine. The CWB claims the "pool" gets the premium instead of my farm... I call it extortion!

SMMMOOOth Vicy ole boy, sllliiiime us guys dooowwwn... ssshhhh... don't use our brains... stick our noses down and get back to work.... Mr. WBrower!

[parsley]

wbrower,

Please tell me you didn't actually believe what Shapansky told you.

Please.

Parsley

[wbrower]

It seems to me that if what Shapansky told me is right, then maybe there is a real business opportunity here.

Anybody want to buy some real high grade, extra high premium, winter wheat seed?

But then that raises another question. What have all these Federal government plant breeding Scientists been doing all these years, developing inferior Made in Canada winter Wheat Varieties?

Maybe I will have to pursue this matter at some further length as I understand some of the CWB experts are giving lessons on wheat marketing in Milk River Tuesday night.

[TOM4CWB]

wbrower;

Just so you know;

If you grow a "high quality" US variety... that is not an approved for the CWRW class... it can only be eligible for the CWB's Canada Feed class.

Now if you feel the fatal inclanation to ship your high quality unregistered wheat south across the 49th, the CWB will allow this... but a warning...

The CWB Export feed wheat buy-back extraction price (for your export license) normally runs between $40 and $80/t above the Pool return on CWB feed wheat...

That is right... you get to pay the CWB $40-$80/t to market a US variety of winter wheat, in the US market... with no useful service provided by either the Canadian elevator (who will likely take $5-$9/t to tell you that you have an unregistered variety) and the CWB who will remind you that Canada Feed Wheat has a $40-$80/t fee to share with your pooling brothers in Canada.

You must hunt up the US sale, do all the paper work, make sure the US grain buyer pays you...

Oh yes, and if the market is strong, with good prices in the USA... don't be surprised if the buyback is around $80-$100/t.

[charliep]

Never sure what you want me to say Tom4cwb.

Canada is a supplier, not necessarily preferred, to China. The above has as much to do with politics (both Chinese and US) as it does with wheat.

First, China continues to buy US to straighten out their trade surplus.

Second, pulling wheat for China out of the center of North America makes little sense in terms of freight advantage. Does it make sense to pull wheat out of Manitoba for west coast movement? It may happen sometimes but the real market should be south or east. China has bought hard red winter over out of the Gulf (wheat for noodles, dumplings, etc.) and to me this is the competition. This announcement to me has more to do with US electioning and supporting/getting support from the North Dakota wheat commission than anything to do with wheat.

Actually the positive thing is China has returned to the wheat market with where they buy irrelevant.

[Incognito]

Take a pill first, Tom:

North Dakota Wheat Commission

CHINA'S PURCHASES OF U.S. SPRING WHEAT LARGEST IN 12 YEARS
2/20/2004

For full release:
http://ndwheat.com/in/news/news_detail.asp?ID=262

Excerpt:

"USW recently learned from trade servicing visits with flour mills in China’s southern Guangdong province that DNS wheat with 14.5 percent protein is commanding a premium of USD$0.65 per bushel over competitive Canadian western red spring wheat in local markets."

[wbrower]

Is this 65 cents a bushel because of politics or quality? Maybe the CWB just decided to withdraw from the market place for a while.

Maybe the CWB needs to account for this.

[Incognito]

This info can be used in many ways in the future, wb.

1) where is the premium of the single desk the CWB pontificates? Are multiple sellers extracting this premium from China?

2) where is the dumping that the US so adamantly preaches when the CWB is offering USD 65 cents lower than the USD price?

3) what happened to the "quality controls" that is so costly to maintain and needed to deliver a premium to western Canadian farmers?

Lots of ammo in one small paragraph.

[craig]

I would also offer my 2 bits. The CWB is currently doing analysis and comparison of winter wheat varieties both in the select and non select program as well as comparing them to U.S. varieties. The initial testing last year would suggest Canadian Select varieties are equal or comparable to U.S. varieties. I would suggest that if we were to find U.S. winter wheat better than Canadian varieties you would be looking in Kansas and not in Montana. An example would be that we know Falcon a Canadian variety that did not make the select class is grown in North Dakota and is acceptable in their market place. The CWB has also indicated that initial market feedback from the select program would indicate that customers are happy with the shipments from Canada and would consider displacing American Winter Wheat. You also have to realize that in the U.S. they have numerous varieties all with a wide range of specifications that are ultimately mixed together. Just what the CWB told us was a problem in Canada because it leads to inconsistency in the product. Our CWB rep I'm sure already knows this so I would suggest he is only looking for an easy out. Maybe the true answer lies in a comment from a CWB employee who suggested that our quality was comparable to the U.S. but that didn't mean it should be priced the same.

[boone]

incognito: Lots of ammo if they can't deliver, so don't get ahead of them Ace till you can properly spring the trap. But it sure smell like 1972. Why would they go to the market (WTO imbalance aside here), where their involvement has the largest positive reaction on prices worldwide unless they have to, or they have allready bought (robbed) cdn grain? Perhaps they are trying to make a very public commitment to the imbalance, but they have always been shrewd to the 9nth.

[Incognito]

Thats why I like the 100,000 MT floor for reporting sales that the US has, Boone.

And I have a habit of getting ahead of myself - so my wife tells me.

[pillypillsner]

I think china is on chinas side.These guys have taken capitalism to a knew level and are kicking our butts.That being said i have read a few rumours that their banks have some problems with some none preforming loans-anyone else heard anything?

[boone]

incognito: I agree with the disclosure inU.S. it's just naturally healthy. As for getting ahead of yourself,you let her know that's how guys like you and I get the guts to propose! Darn there I go arguing the other sides point again....lol