Wheat Board Lovers

[silverback]

In case you supporters of the cwb care to look the annual report has just been released for the corp.

Can any of you please read it and some of the other posts from Tom, Charlie, and others and tell us where you stand on it?

Please now point out to us the highlights and performance benefits this has gotten us western farmers.

Please do avoid the "tough year" argument and give us a well thought out and logical analysis of the report itself.

[furrowtickler]

Agstar - burbot - not a peep eh? Cat got your tounge?

[Hopperbin]

Your not asking for Burbert's opinion are you?

[silverback]

I can never understand burby, but if he wants to take a crack at it that is fine.

I know there are at least 3 farmers who should be able to write in to tell us what this annual report shows them. I read their beautiful stories in the report. I especially like the one about the young bachelor who obviously is quite proud how he handles marketing his non board crops but then says the board is full of people much smarter than him to sell his durum.

[TOM4CWB]

Silverback,

Do you understand page 45?

Sales price comparison2 compared to competitors’ values for wheat, Designated barley and durum

Net per-tonne price spread realized by the CWB November 2007 Wheat Target – $6.90 Wheat [Result] – $13.81

Net per-tonne price spread realized by the CWB November 2007 Durum Target – $24.50
Durum Result – $48.84

Net per-tonne price spread realized by the CWB November 2007 Designated barley Target– $33.70
Designated barley Result– $29.47

"2 Sales price comparison targets for 2007-08 were set in November 2007 in an environment of unexpectedly tight supplies of quality wheat and durum and rapidly
escalating prices as buyers chased those tight supplies. The targets that were established at that time far exceeded historical targets and results for this measure.
In the months following, stocks tightened further and prices continued to escalate, during which time the CWB was able to leverage the single desk to increase the
sales spread well beyond the forecast. This resulted in a significantly larger weighted sales spread for wheat and durum than expected.
Designated barley results were slightly below target, mainly due to higher demand and a high price structure that was favourable to the overall return to pool.
In other words, CWB sold more tonnage into the 2007-08 pool than anticipated, increasing from a pool size of 2.2 million tonnes to 2.445 million tonnes. When the
targets were set, the CWB anticipated that it would sell approximately 170 000 more tonnes to fully cover the pool and achieve an average spread premium of $6.
In fact, over 415 000 additional tonnes were sold at an average premium more than $10.
It should be noted that the maximization of the net price spread does not drive the overall CWB sales strategy. Focus is placed on achieving the highest possible returns
to farmers over the entire sales volume, not necessarily by individual sale."

What on earth are the CWB trying to tell us in this table?

[Fransisco]

Show a little faith Tom, the board is all knowing and all seeing. That is how they are able to set accurate targets months before the seed actually goes in the ground let alone before it gets harvested.

The board always sells at higher prices than it's competitors we know this to be true because the board tells us it is.

[silverback]

I have no idea Tom.

What is their definition of "competitors" ?

Are they in the USA ? Ukraine? Argentina?

I am guessing they mean they were only able to achieve $7 per tonne more than target in the market we just witnessed?

There is also some fine print about their derivative trading activities that obviously went very well.

[TOM4CWB]

Silverback...

This is clever presentation of info:

Wheat Target – $6.90
Wheat [Result] – $13.81

It looks at first glance... the CWB got twice as much as they projected... and the $6.90 is instantly translated by a huge majority of us & of permit suffix holders... to per bushel value.

Don't I recall CWB saying US growers got weighted values of about this ammount?

Since Canada Grain Commission grade quality standards are worth at least this value... and the extra cleaning we do actually costs growers with CGC regulations... much more than this spread...

Plus the CWB takes back extra freight collected... and gives it back to the pools... after I may get charged for some expense my particular produce never incurred...

I know... I should shut up and keep paying.

[GrainBeetle]

blah blah blah, and if the CWB pools generated $20 billion in sales and had $5 million in hedging losses that generated these pool / pricing option revenues you would still ask for their heads.

Go back and read your study notes from your Agriculture 101 hedging course. Or did you sleep thru this class also?

[silverback]

That was very mature, well thought out and researched, but I don't remember seeing any of that in the annual report.

Care to relate your impressions of the numbers released in the report instead?

[LWeber]

Grainbeetle - you are spineless. Post with your real name.

How did the CWB FOREX hedging work for farmers?

Where is that in hedging 101?

[TOM4CWB]

GrainBeetle,

Glad you commented...

So if the futures rise... and I can't deliver on a contract; I pay the hedge loss... that's hedge 101.

However if the futures drop... I can't deliver... the CWB KEEPS the gain. I asked why. The CWB reply... because they likely took the hedge off when it actually lost money... so they can't pay.

HMMM hedging losses... 101... The CWB MUST carry the risk management position till the delivery of the grain has been completed. They say they don't.

So explain how the CWB can effectively manage our money on every other hedging position... except PPO contracts? Where are the hedge losses reported on the pool accounts for 2007-08?

Why did the CWB choose to not account for this according to the CWB Financial Report page 80; 'The Corporation has elected to discontinue hedge
accounting and therefore has not adopted Section 3865 – Hedges.'

WHY?

THis is obviously not transparent or responsible management... and it materially affects my PPO payments... because the CWB took the losses out of my basis.

And the CWB is going to continue taking it out of my families bank account... into the foreseeable future.

THATS RIP OFF 101. I object.

[Fransisco]

I put this on another thread but since grainbeetle is playing over here and Tom mentioned "ripoff" I thought it relevant over here as well.

...Now this is interesting on page 52 it says that the final pool distribution on malt was $289.71 per tonne, .33 per tonne was moved to the contingency fund.

On page 55 we see that feed barley pool A had a final distribution of $279.41 after 51.91 a tonne was moved to the contingency fund.

Page 57 feed barley pool B comes in at $279.59 after 7.04 is taken for the contingency fund.

So without the board redistributing farmers money it would have been

Malt barley $290.04

feed pool A $331.32

Feed Pool B $286.63

So at most they got a 3.41 per tonne or 7 cents per bushel premium for malt over their own feed sales at worst they lost 41.28 per tonne or 90 cents a bushel.

And we all know the last place you sell feed barley to is the board because the domestic market kicks the heck out of it almost every time.

They can't even beat the price of feed barley with malt sales! Pathetic.

[chaffmeister]

GrainBeetle:

You’ve brought much needed attention to a huge problem. Staff at the CWB, Friends of the CWB, the NFU, and the Borg, haven’t got a clue about grain merchandising. When it comes to hedging, trading, spreading, arbitrage, etc you guys haven’t got a clue.

1. The PPOs are terribly flawed. Have been from Day One. The hedge model they devised makes excess money (net) when the market moves up and loses money (net) when the market goes down. That is not within the definition of a hedge.

2. The CWB got caught by “spreads”. The Annual Report says “The factors that caused the losses in the wheat programs relate to commodity hedging and pricing. The placement of hedges in exchanges and future months plus the cost of rolling the hedges in an inverse market, never significant in the past, became very significant in the current year because of the large volatility.

3. Also: “As well, prices offered to producers are based on nearby prices. In an adverse (I think they mean “inverse”) market, the nearby price offered is higher than can be achieved by hedging forward in the futures market.”


Why in the world would you price close to 4 million tonnes “based on nearby prices” and hedge it in the nearby futures month when you must have known that much of it would end up being shipped (and priced) in a later period?

GrainBeetle, if you think you can answer this, please don’t even try. The only answer is “there is no good reason.”

They looked at rolling hedges as a given – “it was never significant before” tells me that they knew they would be rolling hedges. So they don't understand rule Number One in grain merchandising: matching purchases to sales and that includes hedge placement.


Explain to me how you can defend this.

[wilagro]

Why don't you AMATEUR accountants learn how to decipher financial statements so that you all come to the same conclusions? Like a bunch of chickens with the head cut off, you all go in different directions make invalid comparisons and try and second-guess what the CWB did or should have done. You calculate right to the penny how much the CWB has cost you. If you are all so darned smart...why aren't you working for the CWB and showing them how to do the job properly? Why aren't you talking to your reps on the board? You are not going to get anywhere spouting here...not a bit except to reinforce your rage.