Read some interesting commentary today that suggests maybe the CWB has back away from the feed barley markets in an effort to protect malt pools. The suggestion is that current Vancouver feed barley values should be around $200 per tonne which would back off to about $3.00 bushel midpoint Saskatchewan. Exporting less barley also helps to soften domestic feed values. This I would suggest is another example where the operation of the CWB over rides the ability of the market to find price discovery. It also reinforces the fact that at the end of the day what is important to producers is what he puts in his pocket for what he sells. With a barley plebisite coming soon opponents of the CWB will have lots of ammunition to take forward in there effort to sway voters. On the other hand if what is speculated is true the CWB may gain some allies in barley producers who are also barley users.
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Is CWB not selling feed barley to protect malt Pool
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Craig,
We had a ABC meeting yesterday... and Maltsters were there.
The CWB sold the majority of the crop to the "brewers" through the maltsters... without growers backing up the sales with contracted barley.
THe maltster indicated there would be a market for, and supplies of about 4mmt of Malt Barley from this 2006 harvest.
Prices... if we could get through all this "pool" and CWB presold conditions would probably be $1/bu higher than they are now... at a minimum.
It appears now that we are going for about a 3mmt sales volume on malt barley sales... the export market particularily made to China is the killer for us as barley growers...
It certainly appears as if these commitments to China before the CWB had real contacted supplies they had the right to sell... IS THE PROBLEM.
POOL Cross subsidisation of domestic sales into the malt market in CHina/International exports is treatening the whole system... this problem is bringing the industry to a disfunctional state that makes everyone Very frustrated.
Should growers be blamed...? Many Industry participants are furious with us for not living up to the responsibilities the CWB "single desk" system.
Growers are supposed to deliver grain contracted by the "single desk" even when they themselves have not contracted it to the CWB... simply because the CWB already sold the grain, the CWB's expectation is we must suck it up... & give our grain to the single desk even if we have not offered it to the CWB yet.
Is this a proper use of the CWB Act as it is now authorised?
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Saskfarmer, in another thread recently said he was at Agribition in Regina, and that a maltster was there also stating they were paying as high as $4.50/bus for malt.
My question to CWB supporters is what more proof do we need to see, to realize this isn't right??
If in fact this is true I ask the question to Vader where is this money going??
If CWB supporters want wheat to say single desk selling fine. But we are taking it on the chin with malt barley. Something must change. Or even better yet I want some answers. We saw the same thing back in 02. Feed barley was at about $3.70/bus open market, and we were getting the same for malt. That year I know maltsters paying as high as $6.50/bus. We all want answers when inputs go up, why aren't we getting answers on this matter???
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Snappy,
It is a matter of sales volume.
If 1mmt of malt barley is sold @ $220/t, and 2mmt is sold offshore @ $175/t... averaged out it is $190/t.
WITH POOLING TO get past this 3mmt to the last potential 1.5mmt that hasn't been contracted yet is not possible from an economics standpoint.
Further... to suck another 1.5mmt from the barley system would drive domestic feed prices up another $15/t higher or more?
With a plebicite comming up on barley... the CWB doesn't want the livestock sector mad at the "single desk"... the CWB is counting on the livestock sector to maintain the "single desk" to keep grain prices as low as possible.
It has worked in the past... why not this time?
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I just love when I here you guys lump the domestic feed barley users with the CWB as the boogey man.
If you talk to most feedlot operators, most of them farmed or there dads did way back when. They stopped farming and started feeding because of the CWB. CWB made growing grain un economical 20-30 years ago.
If I remember correctly we use domestically, 4 to 5 times the amount of feed barley in Canada then total barley exports.
I hear lots of talk of producers wanting to get out of there Malt contracts to go to the feed market.
Watch out guys we are only tight barley if we export 2 to 2.5 MMT of barley.
If the barley stays in Canada the prices will come down, and come down hard.
Here is something for you to chew on. If every barley producer in Canada was to contract to the CWB 15-20% of every years barley crop, every year barley would always be closer to $3.00 then to $2.00.
I guess my real point is when prices suck it is always the CWB or the domestic user fault. It never seems to be the producers fault. Barley worth $3.70 I better grow a bunch but i'm not going to sell any!
The problem is not the CWB it is the producers who do not want change. Most of those guy are pretty old now and will likely kick the bucket in the next 10 years. Then we might be able to move forward.
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The present situation does indicate that it is not the role of the CWB to get the best prices for producers. It does have an ability to influence the market by selling more or selling less. If it's marketing plan didn't quite work the way it was suppose to it also has options to address that problem.The current malt situation creates no loyalty of producers to the malsters because producers feel the malsters have not treated them fairly. That might change if the board is no longer in the middle.
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Market action or price discovery is when farmers lock their bins because the price is not right. The resulting "Bid" process is an action which determines the buying price of that day. This process serves to ratchet prices up. At the grower level this never happens in a monopoly market place
Reality is, today, most people feel the spread between malt and feed should be about a buck, fifty cents at the least. In an open market no one would deliver malt barley to a maltster at below feed price. In an
open market commodity,the price spread would have to be maintained.
But I can see it now, consummers crying in their beer because
that beer might have more than a cents worth of barley in it!?
As we see the acres & production of barley fall, is there not a similiar pattern to oats in the days before it was successfully removed from the CWB?
Furthermore, I expect the CWB has halted selling overseas to protect domestic prices many times in its history, for the good of domestic or industry prices.
But really when only 51.5% chose to vote, many are just too darn busy to be involved in the process that could enables change of this tradition.
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Snappy get rid of the board, sell barley to who ever you want. Sell wheat to who ever you want. The CWB is not the problem it is the people who support them who are the majority.
My point is the domestic feed grain user, the domestic malt and foreign malt users and I hate to say it, the CWB are not the problem. The problem is the people in the industry who are the problem "Producers"
We need the domestic and export markets for barley. I do not beleive the export value of malt barley has any bearing on domestic feed barley prices. The domestic market for barley is 4 to 5 times the malt market total.
Just remeber what I pointed out earlier what ever barley that does not get exported stays here and all of a sudden our tight barley supply is no longer tight.
The CWB to my understanding has only sold into the domestic market once and that was into BC. That sale did raise the pool return.
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