what does this mean?

[kamichel]

These sales as Charlie points out need to be at extremely high premiums to have any impact on the PRO's. The trade not purchasing any more malt than needed in the current crop year and waiting for hopefully lower new crop prices has absolutely nothing to do with the government announcement.

In this case doesn't the sales need to be at extremely low prices in order to affect the 06 07 Pro like it did. Say if the CWB was 90 percent sold then to bring the pro down 8 dollars per ton on the last 10 percent the prices must be on the verge of giving away. The real reason is likely the farmer non deliveries this year cancelling the higher prices missed.

[kamichel]

Saskfarmer you may want to check with the company you contracted with. If the CWB pulls out of that contract if not now but maybe in August like they say they could, how will that affect your contract? That contract you have is still dependent on the CWB being a partner in it. No one will honor that contract if prices fall. Can you get a written guarantee that the contract can be honored if the CWB pulls out? In my opinion your contract may not mean much.

[charliep]

One company if offering a $4/bu (delivered their facility) on the PRO if the CWB stays in place/functions in an open market. If the CWB goes, the contract converts into a $4/bu deferred delivery contract. Haven't seen the actual contract but these are the verbal commitments.

[broker]

the malt contracts that are in place for 07-08 have nothing to do with the CWB if they are gone. The prices are guaranteed, with or without the CWB. The only thing that would change would be the "upside in the PRO" clause that some are offering. At least this is the case with my clients' contracts.

[sawfly]

I am certianly not any expert and you guys could all be right, but who knows. Its a done deal.

How about everyone think about how this new system is gonna work, forget the board.

The details of whatever is comming are far more important than the politics of the board and barley

I am planting only 160 of barley this year. Assume all goes well and i get 65bu/acre malt quality. just like everyone else in the country.

lets assume feed is 2.60 come fall, and i didn't sign a production contract for malt.

if some one comes along and offers to take my barley right away for 2.70 its gone.

if i do sign a contract for 3.75 and i send in my sample, and guess what its just not up to par.

The farmers without contracts seem to have better barley.

whats to stop that,
i know a lot of that , happened before, year to year but without any price disipline , whats to stop it everyday.

part of the switch to an open market has to have an independent body to determine quality, so contracts are honored.

[charliep]

On the issues of quality/delivery, what changes in the new world.

Fact - western Canada plants about 5 to 6 mln acres of malt varieties for production of 6 to 7 mln tonnes.

Fact - the CWB sells about 2 MMT of malt barley (this market has not grown).

Fact - Malt barley is selection based - not grade based like in wheat. Maltsters/grain companies are the ones doing selections - not the CWB - in the current system. Nothing changes here.

Fact - Selection is a lottery game today. What will change in an open is the move to more contracting/value chain relationship. If a farmer is not comfortable with this, grow feed barley and target the 10 to 20 % better yields available here.

[kamichel]

I think the contracts that I heard was for higher than usual specs so if a farmer cannot meet those specs then it would not be unusual for the barley to not be accepted resubmitted and accepted again for a malt market less fussy. Broker would the 4 dollar price still hold? Broker is there any guarantee the delivery date will be in 07 08 crop year?
Sawfly my production contracts all worked well in the past. Whenever I contracted it was still good at harvest.
I did not contract in the last few years on grounds that the production contracts didn't seem to offer much if anything.

[broker]

the $4 price is not for any higher spec malt, just malt.
Sawfly, in a free malt market, the maltsters are not going to intentionally screw farmers over, they need farmers. They need malt barley, and in my opinion, if anything they will be willing to pay even more for the better quality barley. The past has made everyone very pessimistic about how this industry works. You need to remember that the malt buyers are actually the end users, not like dealing with a line grain company. They are out to make as much money as they can, and yes, the scenario you supposed ,could happen if your contracts are with those buyers. The malt co's have told us that they feel that malt barley has been underpriced, but they pay what they have to from the CWB. With them out of the picture, you are now looking at the same situation. The malt buyers will pay what they have to to get the barley. If that is $4, or $3, whatever the market says, they will pay.

[kamichel]

So broker do these min. price contracts have anything to do with the CWB? Is just that if the CWB pool price in the end(if we have one)ends up higher then more is paid to the farmer?

[kamichel]

Back to the origional post of What does this mean? Looking at the markets today everything is up. Chicago Board wheat up over 20 cents. Could there also be such an upsurge in malt prices that the CWB refuses to post them on grounds that current deliveries from farmers must be made in this crop year?