CWB Premium Myth Shattered...$226M losses proof.

[cottonpicken]

We should hire the indians to protest for us.

Cheaper than lawyers,fairly effective.

I'm thinkin that mohalk tribe in ontario or was it quebec?

[Fransisco]

Throw some Quebec seperatists into the mix and before you know it the feds would be stocking up on pampers.

[Fransisco]

BTW- agstar when we say we want choice, we mean a choice other than the wheatboard not another choice within the wheatboard.

Nobody asked for crappy programs that cost everyone money.

[TOM4CWB]

Agstar77;

What is this?

"Is it possible that a number of individual producers would have been caught in a short squeeze?"

How many grain companies in Canada... went broke... lost Hundreds of millions $$$ on short Canola?

How many growers do you know?

NONE.

ONLY the CWB... with 'single desk' money... and no respect for those they were to serve... would have blown a quarter of a billion $$$'s on foolish speculation.

I challenge the CWB on their statement that they didn't speculate.

Going into January we all knew (those who listened to CWB sales outlooks) that they were set to sell out by May 30/08.

Obviously the CWB sales dept. were 'ahead' of the sales pricing line normally followed... because the prices offered in the fall off the combine and into the early were good value and easy to make.

The stupid turn to speculation was this... The CWB tried to buy back the stocks it had sold... going through the highest prices in history... and then obviously held the long positions bought at high prices through into summer and fall to lose the $226M.

No sane marketer in their right mind... would have done what the CWB did (go long in Jan/Feb). Growers sold at high values... the CWB bought these positions instead of letting the market work as it should have.

Proof Governments/Courts should never give monopoly power to any institution... especially to those who stake their total existance on that monopoly... with NO REGARD to those (in this case patient commercial farmers with marketing plans) they confiscate the property (grain)they claim to collectively own (to benefit the 'pool')!

Agstar77... Economics 101.

[jensend]

tom there's another more likely (to me) scenario. the board tried to resell with paper what it had sold in physical stocks to try to gain some of the upward movement it had missed. if it had bought back a short squeeze would have been to its advantage. i think you'fe got it backwards and the cwb response to being caught in the updraft was exactly what most farmers would have done - average up. ask any broker

[jensend]

correct me if i'm wrong but the reason i see it as happening that way is that it seems to me the talk of the cwb being caught on the wrong side of the market was during the price rise not afterwards. either way they screwed up and shouldn't have been speculating and certainly shouldn't have followed a trading strategy that has broken a lot of small specs.

[TOM4CWB]

Jensend,

Farmers sell the cash at over $12/bu... $15/bu.. then even more over $20/bu... they do not buy it back. BUYING the grain back... would be pure speculation.

You me find one farmer marketing plan... that would realistically buy back wheat... when it was over $12/bu.... and I will point you out 7 at the CWB... who lost us over a quarter of a billion $$$... and CWB managers that knew they were speculating... and knew they were on the wrong side of History.

I was in Winnipeg for grain world Feb 2008... and watched Ritter sweating bullets. I wanted an export license... to sell to a $22/bu market in Sweetgrass MT. and the buyback was about $500/t. We had till the end of May to deliver.

Ritter and Arison both refused to even talk... said they were much to busy with 'the crisis' to be bothered with my little issue.

Something like loosing $50-100M... every few days.

Remember... the CWB hedges for more than just growers who cash price... they risk manage for grain buyers as well... We need to see who exactly cost us what.

This whole Annual Report is just a cover up.

AND YOU KNOW IT JENSEND!

[TOM4CWB]

Jensend,

Before or after the market peak is not the issue... going long any time during that time was. Reading between the lines it looked to me like Ritter and Arison knew they were in a real box at the end of February 08... when I was in Winnipeg. We had been told the CWB was going to be sold out... by the end of May.

Now how would they manage the pool price line as planned... with big sales... and an obvious crash landing for the pool by holding those long positions... The basis was up to $6/bu over the futures... and we were given plenty of time to deliver (over 3 months) These were cash sales... back to back... our grain customers were willing to pay a kings randsom at the end of Feb.... and we knew once the end came it would colapse... as there would be no more grain to squeeze out of the system.

The CWB ALWAYS sells... month in month out... no need to pay a premium to get them to hold stocks!

I had a British Miller laugh right in my face... I had been an object of dicussion that very day in Feb. at the CWB.

WHAT A FARCE.

[TOM4CWB]

Dear Charlie,

How much of the 650,000t do you guess was priced between Jan 1/08... and April 1/08?

How much of the CWB pool (% sold) do you guess the CWB sold?

A look at the PRO during this period... gives an indication... that a very small portion of the (07-08 pooled CWB)wheat crop was sold during this time period... simply from PRO changes.

Yet deliveries were on track... so basis gains on PPO contracted wheat must have been massive!

Why no results with the breakdown of basis gains vs. hedge losses... ? What were the actual CWB losses?

[bucket]

One thing to consider. If farmers were in an open market environment - would they collectively have lost 226 million on their marketing?

Somehow I don't think that would have happened in an open market. There might have been a few struggling farmers but the overall returns to most would have been higher.

I just don't fundamentally agree with income splitting with anyone which is what we have with the CWB.

AND INCOMPETENCE.

[HFL]

Good point Fransisco.......Nobody asked for this crap

[charliep]

Just a reminder of what this $226 mln is.

1) It is a performance measure the board of directors uses to monitor the relative success or failure of the operations side.

2) The basis of the measure is an assumed pace of wheat sales during the full period of CWB sales during the crop. If the sales pace is faster or slower than the assumed pace, the CWB operations side can offset this risk in the futures/derivatives market.

3) The operations side/board of directors needs to be up front about what this measure means. They alson have to be up front on the relationships between these losses and those of the producer payment options contingency fund.

4) Given the products and services the farmers (a request of all farmers in the annual surveys), the CWB has to be a lot more innovative in how they handle the pools/producer payment options. This includes multiple pools within a crop year like feed barley, matching actual cast sales against values offered to farmers (cashplus for malt barley), etc. THE CURRENT PROGRAMS ARE EXTTREMELY HIGH COST AND DO A POOR OF MANAGING CWB RISK WITH ALL COSTS EVENTUALLY UNLOADED ON FARMERS. IN MY HUMBLE OPINION, THE CWB SHOULD INCLUDE THE $90 MLN PPO LOSS IN THE PERFORMANCE MEASURES LOSSES WITH CWB POOLING ACCOUNTS PICKING UP THE WHOLE TAB. BOTH REFLECT THE INABILITY OF THE CWB TO EFFECTIVELY USE FUTURES MARKETS.

[Fransisco]

So in short, you're saying that the CWB lost a total of $316 million in the futures market this past year.

[charliep]

Yes with perhaps some pain on the basis side for the daily price contract. From the annual report, basis risk on the producer payment options was covered by the CWB adjustment to futures.

In highlighting, the note has to be that CWB is never clear on what their basis given all products are related to the Pool return outlook at a given and the assumed relationship with the average CWB prices during the year (both actual sold to date and projections for unsold inventory). The accountant nevers comments on this in the annual report - not their job. They can only look at CWB process from a strictly accounting standpoint. The accountants are not hedging/risk management specialists and really only can be held to th information from page 73 on in the annual report. Read the statement of work on page 73. The statement is the same on all financial audits by the way - nothing special except perhaps reference to the contingency fund. You might also want to read the disclosures on page 68 of the annual report (Reconciliation of Non-GAAP Measures - indicates some changes to how financial instruments are being reported in all financial statements including CWB one as a result of recent experience in the over all business world.

[TOM4CWB]

Dear Charlie,

I note this:

"Exchange-traded derivatives are used to
complement the selling activity, to provide flexible pricing
alternatives to customers, such as basis contracts, and to
engage in discretionary pricing activity when appropriate."

'to customers'... not growers.

This baffles me.

Then the CWB complains about the PPO contracts after this statement.

The CWB could have easily traded well over 1 billion dollars in long hedges... but they refuse to disclose what they do... it was the CWB's opportunity to be transparent. They FAILED.

"The Corporation has elected to discontinue hedge
accounting and therefore has not adopted Section 3865 – Hedges."[Page 80 CWB Annual Report 07-08]

"Realized gains or losses are recorded in the period in which they occur as a component of revenue.”

This is our $$$ Billions the CWB are playing with... AND THE DIRECTORS CHOOSE to play fast and loose with our money... and then to refuse to show us what they did.

I can imagine the problems this causes.

Everyone I talked to knew the CWB was pushing wheat through the roof.

We know the CWB uses these exchanges to price its cash wheat.

No wonder the CWB could not get any where near US elevator prices... cause very likely the grain buyers would be furious... and require a huge discount on the basis... (I know I would have) because it was all too evident to grain buyers the CWB was 'Discretionarily' manipulating the market especially on the MGE!. Every one I talked to in the trade... knew it!

We growers lost on both sides... the buyers had the CWB over a barrel.

Now the CWB refuse to show what they did... I wonder why?

There should be a parliamentary inquest into CWB manipulation of our food markets!