The CWB has to come clean to farmers

[Fransisco]

Ottawa- March 4, 2009- The CWB in a news release on March 3 claims that they can set the record straight on the losses that occurred last year. However,<b>the only thing that the CWB managed to prove with their release is that farmers can not afford to have the CWB do their marketing.</b>

The CWB again reminded farmers that they lost nearly $90 million from their Producer Payment Option programs and $226 million more from other discretionary trading activity. The ugly reality is that farmers lost over a quarter of a billion dollars due to the CWB’s risk management practices last year. That is on top of the $30 million lost the year before.

The more farmers learn about these losses the more it is starting to look like the CWB uses the contingency fund like a carnival shell game. A grand total of $38.7 million in other CWB revenue was shuffled into the contingency fund including interest from the pool accounts. Apparently $25.5 million of the $38.7 million was taken from the CWB pool accounts and shifted directly into the contingency fund. It does not matter how slickly the CWB shuffles the shells, the bottom line is they lost farmers’ money.

These losses need to be fully investigated. The CWB must allow the Auditor General to conduct a full and comprehensive investigation of their disastrous trading activity.


David Anderson, M.P. (Cypress Hills—Grasslands), Parliamentary Secretary to the Minister of Natural Resources and for the Canadian Wheat Board

[Fransisco]

So, if they're ready to do a non-confidence motion over a $3 billion blank cheque,then the reason they're not ready to do one on the wheat board is...?

[stubblejumper]

one simple solution quit all ppo's

[gregpet]

Um, stubblejumper, the $90 million loss came from the PPO's. $226 million loss from discretionary trading in the pool accounts, the holy grail of the CWB(speculating with someone else's money).

[Hopperbin]

The CWB would like us to think we should quit PPOs. We were using them to compare to world prices.

[Fransisco]

And how do they compare to world prices? Let's see what it looks like today...

$5.96 Canadian for No. 1 CWRS 13.5 ,backed off to Manitoba

http://www.cwb.ca/db/contracts/ppo/ppo_prices.nsf/fixed_price/fbpc-wheat-2009-mhrs-20090304.html

$6.48 Canadian at Bottineau ND for the same kind of wheat.

http://bottineaufarmers.com/index.cfm?show=11&mid=6&theLocation=1&cmid=1&layou t=1

Not too bad, the world price only beats the socialist marketer by .52 cents a bushel.

[Fransisco]

Now what about winter wheat?

$4.69 for the compulsory marketing agency backed off to Manitoba

http://www.cwb.ca/db/contracts/ppo/ppo_prices.nsf/fixed_price/fbpc-wheat-2009-khrw-20090304.html

$5.77 Canadian in the land of the free.

http://www.bertholdfarmers.com/

Look at that, another $1.08 per bushel in the open market.

Freedom wins again, socialism gets a towel slap to the nads.

[chaffmeister]

Let’s get something straight. Stubblejumper and the rest of the Borg need a double shot of reality.

Stubblejumper and cchurch (from another thread) seem to think that the PPOs are the problem. I say its managerial incompetence cloaked in arrogance and wrapped in stupidity.

FACT: The CWB adheres to a Wheat Pool Pricing Model, which establishes the pricing pace for the wheat pool, while allowing for “discretionary commodity trading”. (page 45)

FACT: Pricing within the model is a combination of actual cash sales activity and derivative trades. (page 45) (We’re hoping “derivative trades” means futures but it could mean other “exotic” instruments.)

FACT: The CWB admitted to losing $226 million in the pool accounts due to “discretionary commodity trading”. (page 45)

FACT: The pool accounts usually earn interest on “pool account balances” (check for yourself). This is because they pay farmers only the initial payment but get paid in full for the grain. Since they run a positive cash balance, they earn interest. In 2006-07 it was about $1 million. In 2007-08 it was a $13.290 million <b> loss</b>. (page 60)

FACT: The CWB explained the interest loss by saying “The interest expense on the pool account balances has increased as a result of margin financing costs associated with commodity hedging activity.” (page 60) Take note – this is the pool account we’re talking about here. Imagine - hedge losses in the pool accounts!

FACT: The PPO account also was hit with a large interest expense - $12.681 million. This was because of margin requirements as well. (page 61)

FACT: The PPO account had $467 million in hedging losses. (page 61) We don't know what the pool account hedge losses were because the CWB doesn't report them.


DEDUCTIVE REASONING: If the PPO account and the pool accounts had similar interest costs – both because of margin requirements –it stands to reason that the pool account had similar hedging losses as the PPO account. $467 million plus $467 million equals $934 million. Add to this the “paltry” hedge loss in the EPO account of $4.248 million (page 63) and we round it to <b> negative $940 million </b>.

I’m willing to give the CWB the benefit of the doubt about hedging in the pool account – it may be sound trading. I don’t know because they don’t give enough information to assess it properly.

I’m more concerned with the size of the hedge losses. This $940 million is what went out the door – paid into various futures exchanges – CBOT, KCBT, MGEX.

When I first looked at the PPO accounts and saw the size of the program and the size of the hedge losses, I was aghast. Putting all those hedges in one futures month and then expecting to roll it with impunity – wow, these guys are dumb.

But now think of it – we’re likely talking about double the size of the hedge because we’re talking about the pool accounts as well as the PPO account. Holy shit. Close to a BILLION in margin calls. Who knows how big the CWB was in these markets but undoubtedly they were the biggest in the March futures. These guys could have been the cause of the divergence between cash and futures markets – meanwhile, the CFTC blamed the funds. Holy shit.

And all you Borg-types think the CWB should just get rid of the PPOs. Don’t you get it? This would have happened anyway – even without the PPOs. But without the PPOs, we’d never even know about it. It would all be buried in the pool accounts.

Now it’s got me wondering ---- do they engage in “discretionary trading” in forex?

[agstar77]

Careful you will be labelled a commie on this site! Anti-trust laws with teeth would help.

[dave4441]

Saskfarmer you commie. Has Cargill asked for any public help?? What does the finacial sector have to do with taking the assets of a private company. They need to get rid of Chavez. You see companies that sell you products as crooks, not partners. Complete joke.

[cropduster]

Good deductions Chaff!!You are right, the `borg` types still don`t get it.The enormity of the situation is hitting you too!And they blissfully move along,not unlike the full page ad in farm papers of the guy whistling away!!On a per capita basis, this is far worse than the sponsorship scandal!Farmers need to ask at the accountability meetings,just how this is to be rectified!

[jensend]

chavez might be a loon but he also might have cargill figured.

[liberty]

Chavez is a thief, plain and simple. Anyone who lauds this thug is promoting thievery.

Why anyone would willingly invest a dime in Venezuela is beyond me, given that any successful investments will inevitably be stolen.

[Fransisco]

Jeez, if that's your attitude sask maybe you don't deserve to ever get ownership of your grain back.

[Hopperbin]

Apparently they were selling rice without the price controlled price stamped on the bag. Apparently by their laws and the will of the people they are able to do it.
We do have price controls on CNCP shipping of our grains. So cannot say we totally cannot have price controls on fertilizer here.