The CWB 2001-02 PRICES RIP OFF FIXED PRICED FARMERS!

[charliep]

It is always hard to compare a pooled price to a daily bid. Having said that, the domestic market will remain the best market for feed grains/perhaps the lower end of the wheat complex over the coming year.

Like you Tom4CWB, I like to look at the daily prices in Portland (likely the closest market we would sell against in an open market). Last Friday's Portland export price for corn was US $2.585/bu (US $102/t). US feed barley was offered at US $2.46/bu (US $113/t). Canadian feed wheat would likely would likely be priced off the corn value (Cdn $158/t fob using an exchange conversion of 1.533) to a S.E. Asian country like S.Korea. Deducting costs of $48 for loading the ship, cleaning, elevations, rail, etc would net a price of $110/t basis local elevator.

Our relevant price, however, is the imported cost of product. Given the cost of moving corn from Minnesota/South Dakota is not much different to Portland or Southern Alberta, this is the realistic price for our feed comparison. Based on todays market, if feed barley/feed wheat prices move over $155/t, corn starts to replace our feed. Prices under $150/t and local feedlots/feedmills will use local product. The export market is irrelevant given the $40/discount to the local market.

[TOM4CWB]

Charlie,

Then answer me this,

The CWB SAYS they extract a premium for the grain they market for us.

If the market is really as you say it is, the highest price in the world,(40/t above the US) then why would the CWB be charging $15.00/t above the PRO to buy my feed wheat back?

According to your figures then I would be losing $55/t shipping south to the US!!!

Things don't add up!!!

What good is a marketer that refuses to even consider selling my feed wheat at market value? Is this the trait of a premium marketing expert?

Our customers must laugh at us to create such an absurd system!!!

[charliep]

I don't have an answer to your questions other than differentiating markets/capturing value is the basic premise of the CWB system. You are being charged the theoretical value of what the CWB thinks it can achieve into the US market. My problem with this is I don't know what the feed wheat (or any wheat for matter) that is being quoted in this value. Is it an unlicenced variety or a 52 lb/bu feed wheat?

I always come back to the question of what an open market system (or for that matter dual market system would look like? What quess is it would focus less on grade and more on quality factors. Wheat would float to where is has value to customers and is competitively priced with other grains.