CWB the3 super-seller

[TOM4CWB]

Chaff/broker,

The Informa study we just went through at WCWGA in Winnipeg brought up a good point... which I have been saying for some time.

The DNS Red wheat from the US... is 60% destined for the export market.

That means the CWB claim is bogus that the US domestic market creates a premium for US growers ABOVE what the global export market is. There is obvious ARBITRAGE in a cash market.

iT IS PURE FOOLISHNESS THAT WE CAN'T GET A DAILY CASH MARKET FOR OUR EXPORT MILLING WHEAT. THERE SHOULD BE AN EAST AND WEST COAST CDN DAILY PRICE... 12 MONTHS OF THE YEAR.

It is like saying there is a premium for domestic Canola in western Canada... OVER the export market for Canola.

The CWB is simply WRONG... as the Informa study, the CD Howe study... and any other study that has been peer reviewed proves!

The worst part of it all... is that CWB pools (lack of transparent price signals... $50-100/t EPO premiums)distort the whole grain sector gross value DOWN... no matter what grain crop we grow. The Informa/CD Howe studies proves that we are short $30/t/yr on CWB pool prices...

The 'designated area'grain grower is simply short many $$$billions in the past 10 years... and our outstanding loans are a grim reminder of this reality!

tHERE COULD BE NOTHING MORE FRUSTRATING... THAN THIS STUPID US BORDER ARGUMENT... THE BORDER ONLY MEANS SOMETHING... BECAUSE THE CWB UNDERVALUES OUR WHEAT... AND AT THIS MOMENT... THE CLOSEST US ELEVATOR (TO YOUR CDN FARM) IS THE EASIEST ARBITRAGE POINT TO SEE!

IN PRACTICAL REALITY... THIS WOULD NOT MEAN ANYTHING AT ALL... IN A TRANSPARENT 'FREELY' OPERATING MARKET...

IN FACT

THAT WOULD VERY LIKELY BE THE LAST PLACE CANADIAN WHEAT WOULD GO... FROM THE CDN 'DESIGNATED AREA' FARM GATE!

[chaffmeister]

Tom:
You've got it! This is what I'm saying.

Here's a real life example.

Let’s say the current offshore price for wheat is C$250/tonne at the port.

Back off freight to Edmonton and you get roughly $213/t.

Back off freight to Great Falls and you get roughly $213/t.

I’ve left out elevation, fobbing etc on purpose. And I used today’s exchange rate to convert the US prices/rates to Canadian.

(Edmonton to Vancouver rate is roughly $36.80/tonne. Great Falls to Portland is roughly US$31.25/tonne, or C$36.88/tonne.)

So assume you’re up around Edmonton and we have an open market (or a voluntary CWB), so you have a choice – you can sell your wheat to whomever you want – including buyers in the US. You check the local price and its $213. You check the Great Falls price and it works out to $213 as well.

Where do you think the grain is going to be sold and delivered to? If you still think grain is going to flow south to the US, you need to go to the back of the class and then sign up for one of Brenda Tjaden-Lepp's marketing courses.

Now - using these real life FACTS, does anyone still believe that the whole idea of a voluntary CWB is so that we can sell into the US?

US prices simply give us a window to world values.

Let's please stop this stupid rhetoric about shipping to the US and all the other stupid arguments about US trade actions and what would happen if the CWB wasn't there to stop the flow into the US.