Current CWB Debate - Is Barley a Different Issue Than Wheat

[charliep]

Just reviewing the CWB response to the Task Force (see CWB web site).

I see the benefit number $59 mln for feed barley. The reference for the number is a Schmitz, Schmitz, Gray study with a date of 2005. The only paper I can find is January 1997. Has this study been redone or is the $59 mln old numbers from the mid 1990's? In the context that the CWB handles about 2 MMT of feed and malt barley, that puts the benefit at $30/tonne.

Will leave alone. Can barley be handled as a separate issue in the current debate? Should it be treated the same as wheat? If we take a supply approach versus simply a farm level, do the domestic maltsters/brewers have the tools to compete for barley with the feed market?

[charliep]

I will note that I do look at the current producer pricing options when I ask this question.

"A" series Feed barley PRO Oct. 16 - $142/tonne. FPC - $146.05/tonne. These are Vancouver prices so need to take CWB deductions off. No FPC available "B" series unless CWB announces this year.

Standard select two row malt barley Oct 16 (again port price) - $184/tonne. FPC - $180.05/tonne. Basis today relative to Western barley futures $30.15 minus $6/tonne adjustment for existing sales. Basis adjustment last year - $40 to $45/tonne over. Range 2006/07 - $25 to $0 over. Need to add on VIP, carry payment, trucking premium, low protein, etc.

Current prices maltsters would pay if they were to book additional business with the CWB. Add $40/tonne onto the current PRO.

Local feed market. You put your own number. Outlook? You can put in your market opinion.

[charliep]

Basis range 2 row malt barley should be $25 to $40 over (not $25 to $0).

[TOM4CWB]

Charlie;

I can't agree that barley is different than wheat... other than we have diversified our barley markets to a larger extent... around CWB restrictions... which wheat growers are about to follow in spades.

Let's be frank, the CWB even today is keeping feed wheat prices in line with milling values being the bottom line to where feed wheat will bump against!

The futures on feed wheat rise... and the basis widens to adjust to the CWB Pro on lower values!

I NEED a CWB in the domestic feed market as well as in the export market.

Why does the CWB get support from supply management?

Because the CWB caps feed grain prices... unlike the AWB I might add... and steals from grain growers in the process.

AGAIN... I need the CWB as to compete in the domestic market... and bring basis levels in that maximise my grain returns!

Will this happen?

Not the way we are headed... and the NFU is in the pocket of supply management which would never allow grain growers the power to band together and maximise our domestic returns like the AWB can do in Australia.

Chaffmeister... we need some help here!

[wd9]

As can be seen in the last 2000 posts, this isn't a grains issue at all, but a fill-o-sof-i-cal issue. Apple pie and rights and freedoms.

[charliep]

Perhaps you are right WD9. There is more money generated in discussing philsophical issues than in marketing grain.

As practical issue, I will note the problems the maltsters face in the current environment.

The maltsters/brewers have signed forward contracts that include prices (no different than a crushing plant would with a farmer). These forward sales are likely at lower levels than the current ones and are keeping the PRO down. This is not a bad thing but rather just stating what is happening.

Where the problem arises is the maltsters/brewers still have the responsibility of selecting the barley. There cannot be physical supplies selected until barley is in the bin. The CWB does not bear any responsibility for sourcing.

Today. High feed prices. Farmers can sell anytime you want and get a high price. Malt payments are getting held back because of the existing sales. New sales that the maltsters and exporters would enter in today would be at much higher and pay the premiums needed to justify farmers entering into malting contracts versus simply selling into the feed market.

I realize this will unleash a tirade of anti maltster rhetoric. My question is simply to think about the win win opportunities for both farmers and malters that enhance this supply chain (maybe even value chain relationship). If we look at this, what is the role/benefit of the CWB in this process?

[charliep]

No ethusiasm to go down this road so I will try another.

What makes canola different than wheat? I will note that I was at a Alberta canola industry meeting (Phil Thomas fall meeting) about 2 years and the Canola Council of Canada presented their business plan with an annual canola export and domestic crush forecast of 7 MMT. Everyone thought that was crazy/would never be achieved in the short term. My number today (with the newly announced crush plants in Yorkton and upgrades elsewhere) tells me Canada can easily produce 8 to 9 MMT of canola and not have trouble finding markets.

Wheat and barley production are declining in western Canada. The most optimistic market for wheat is ethanol (keeping in mind this will not be our traditional milling wheat) and that will be purchased non board.

Perhaps the reason for the differences in the two crops is vision of where they are going. Where will wheat markets be (location and quality) in ten years time. How is the best way to get there?