Charlie,
I have been watching pools for years... and almost with out exception... they result in lower value to grain growers forced to sell through a "single desk", when for cash flow and storage/handling logistical reasons they are forced into the residual domestic market.
WHY you ask?
1. In a major up market... the participants who entered the pool before the upward move... expect the better price also...
Without paying for the risk premium to partake in the higher prices... (the whole reason for "single desk pooling")
This "dilution" results in market signals such as CWB "adjustment factors", we who took the risk and waited patiently... for an increased return... must pay the former “early” sellers.
The CWB "adjustment factors" lower the upward residual domestic market price move...
The domestic consumers outside the "single desk" don't have to pay full price and fully compete with the international market (for which the "single desk" controls access) for the grower's grain.
Put another way;
Growers with unpriced grain inventory are subjected to lower values, which buffer (upward prices) in markets operating outside the “single desk”(namely the domestic feed market)... forcing those who patiently waited to market (and took the greater risk) to pay earlier/(sellers) pool participants, or give the increased value away to our domestic market.
This ends up causing the CWB "single desk" to be a direct subsidy by grain growers to the domestic feed market consumers.
No WONDER why the supply managed sector supports the CWB “single desk”,
And now for the second reason:
2. In a downward market leg, or move, the "single desk pool" excludes those who waited to sell... and locks them out of the international market... till a new pool is started. (3 CWRS CPS last spring a perfect example)
This refusal to market grain offered, distorts domestic markets dispurportionately DOWN, (during the most depressed market period) by forcing the later marketing growers produce, into the residual market that the pool excludes... (for cash flow reasons) thus driving this domestic cash market down even further... instead of just diluting the higher pool values.
The "single desk" is to take from some growers... to give to the other growers... during a rising market…
And
TO force grain into an already depressed domestic market during a down leg in the market cycle.
THE
"single desk" pool growers want "free" risk management.
As we all should have known by now...
A free ride doesn't exist!
I have been watching pools for years... and almost with out exception... they result in lower value to grain growers forced to sell through a "single desk", when for cash flow and storage/handling logistical reasons they are forced into the residual domestic market.
WHY you ask?
1. In a major up market... the participants who entered the pool before the upward move... expect the better price also...
Without paying for the risk premium to partake in the higher prices... (the whole reason for "single desk pooling")
This "dilution" results in market signals such as CWB "adjustment factors", we who took the risk and waited patiently... for an increased return... must pay the former “early” sellers.
The CWB "adjustment factors" lower the upward residual domestic market price move...
The domestic consumers outside the "single desk" don't have to pay full price and fully compete with the international market (for which the "single desk" controls access) for the grower's grain.
Put another way;
Growers with unpriced grain inventory are subjected to lower values, which buffer (upward prices) in markets operating outside the “single desk”(namely the domestic feed market)... forcing those who patiently waited to market (and took the greater risk) to pay earlier/(sellers) pool participants, or give the increased value away to our domestic market.
This ends up causing the CWB "single desk" to be a direct subsidy by grain growers to the domestic feed market consumers.
No WONDER why the supply managed sector supports the CWB “single desk”,
And now for the second reason:
2. In a downward market leg, or move, the "single desk pool" excludes those who waited to sell... and locks them out of the international market... till a new pool is started. (3 CWRS CPS last spring a perfect example)
This refusal to market grain offered, distorts domestic markets dispurportionately DOWN, (during the most depressed market period) by forcing the later marketing growers produce, into the residual market that the pool excludes... (for cash flow reasons) thus driving this domestic cash market down even further... instead of just diluting the higher pool values.
The "single desk" is to take from some growers... to give to the other growers... during a rising market…
And
TO force grain into an already depressed domestic market during a down leg in the market cycle.
THE
"single desk" pool growers want "free" risk management.
As we all should have known by now...
A free ride doesn't exist!
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