Why sell any durum under series A contract?

[checking]

Dmlfarmer, how much of that big "A" on you have you got left after doing all that laughing? Must have a pretty small piece left to sit on!!! The truth is that it would not matter if the CWB price was a dollar a bushel for durum. It would still receive all that it wanted to sell from farmers. On that point only, I agree with you. Those who are saying that they will sign up a portion of their production to free up bin space for the next year are also saying they agree with you, but for a different reason. This is what I have a difficult time in grasping. We all know that this crop was the most expensive of any to produce. Yet most are prepared to blow a part, or all of it out on the chance they will replace it the following year. I don't get it, I will never get this logic, and the CWB will receive none of my durum at those PRO's.

[parsley]

well, well checking.your mamma must have some smarts.

[cityguy]

How short does everyone think the CWB is? Presumably Cdn durum is held off the market, world price goes higher (wipes out the $1.00/bu US durum LDP), but CWB can't access the market becuase of no supply, which forces tradition steady Cdn customers to go elsewhere? Where does that gets us over the long run?

[charliep]

cityguy

Actually to be clear, the CWB is not short durum. There are currently 1.2 million tonnes of durum in the commercial
system (elevators and terminals). Weekly disappearance is about 100,000 tonnes at best so about 12 weeks supply
in the system.

<a href="http://www.grainscanada.gc.ca/statistics-statistiques/gsw-shg/2009-10/10gsw_shg07.pdf">cgc</a>

To make a comment on whether the CWB is short or not, you have to understand the CWB contracting and delivery
system. Farmers are allowed two opportunities to contract durum to the CWB - Durum contract A (October 31
deadline) and contract B (March 31 deadline). Grain flow is another alternative but someone can explain to you.

The risk anyone takes in not subscribing to the A contract and holding for the B is you don't know acceptance on
either. As example, let us say most farmers didn't sing up durum on the A series. Quite likely there would be a 100
% call on the A - farmers who signed could deliver as much as they like. The B series comes along, more farmers
sign up past what the CWB thinks they can sell and the CWB decides to take 50 %. Anyone who didn't sign up on the
A is SOL.

Add this to the irony of comparing average prices. Farmers didn't have access to full delivery on the 2008/09 crop
because of less than full acceptance on the CWB contracts. The discussion is now whether you want the crappy
average price on the 2009/10 crop or play poker on B contract acceptance/whether the average price on the
2010/11 will be better (having stored the crop for a year).

The question is whether the current system of CWB contracts/average pricing serves farmers better than an open
market with variable prices/farmers making own decisions about delivery.

Parsley - every good answer needs a good question.

[cityguy]

Thanks for explanation. So if the CWB isn't short then do they sweat if the supply offered is cut back? Presume that holding back supply from the CWB will allow for world market to rise (and hopefully eliminate the $1.00/bu US LDP) but then the CWB is stuck not being able to sell into the rising market. Leaving aside the philosophy of pro/anti choice, a decision has to be made on contracting in the next month.Is it to the Canadian farmers advantage to only contract half of the durum to the CWB so that they are unable to meet the tradition 3.5 million tonne demand (100,000/week and presume that the demand is a steady 100/week).

[Choice2U]

Cityguy, the two options are:
1. 100% trust the CWB and sign up everything so that they know exactly what they have and let them manipulate (if they actually could) the market as they see fit and just accept whatever delivery amounts, timing, price, etc that they decide to return to you. In this scenerio everything is out of your hands and you only manage your farm needs based on all the other non-board crops that you grow.
2. Try and do whatever is best for your particular farm based on what crops are worth storing with the greatest upside, what crops to deliver based on available storage, cash flow requirements now and in the future, risk of spoilage based on what the harvest weather dictated, etc.

Personally, I don't think there are any benefits to the CWB so what I have to give up is not worth it.

[Hopperbin]

Somehow I don't think with holding durum from the CWB is going to do anything. They already know the stocks are there and do not need to convince farmers to withhold 50 percent. What I do not get is why does the CWB not have a higher pro and only accept 60 percent of the durum. Like dahhhhhhhhh,

[Hopperbin]

ooops they did that last year, dahhhhh, now we have tooo much, dahhhh. That is about all I have to say.

[dmlfarmer]

Cityguy, what most people, farmers included, forget is that the CWB is not a buyer or consumer of durum. The CWB is simply a marketer or agent of durum. They can only market what farmer contract so if every farmer would lock their durum bins and refuse to sign an A contract the CWB would be forced to withdraw from marketing durum. If there is enough durum in the system to cover sales CWB has already made then the CWB would not "sweat it" at all, other than realizing ) that good customers that they have had a long term relationship with will have to go elsewhere and (as every business person knowsit is likely harder to win back a spurned customer than to keep a customer happy. Your question really is moot however, as a group of farmers in a room cannot agree on the time a day much less a marketing strategy so no matter how much some people on this site demand that no one contract durum at this price to the CWB and when these same people complained the CWB would not take all their durum last spring (snicker) there will be an equal number of farmers with the opposite strategy.

As far as JDgreens assertion that if we lock our bins maybe our loyal buyers would complain about paying too little for our durum... this will happen the same day farmers COMPLAINING about fertilizer and roundup droping 50% this past summmer and saying all farmers want to pay more for crop imputs! Everyone, durum buyers, farmers, crop input suppliers grain companies, everyone in business want to buy low and sell high. Any socialists on this site want to disagree with me here???

[dmlfarmer]

Cityguy, what most people, farmers included, forget is that the CWB is not a buyer or consumer of durum. The CWB is simply a marketer or agent of durum. They can only market what farmer contract so if every farmer would lock their durum bins and refuse to sign an A contract the CWB would be forced to withdraw from marketing durum. If there is enough durum in the system to cover sales CWB has already made then the CWB would not "sweat it" at all, other than realizing ) that good customers that they have had a long term relationship with will have to go elsewhere and (as every business person knowsit is likely harder to win back a spurned customer than to keep a customer happy. Your question really is moot however, as a group of farmers in a room cannot agree on the time a day much less a marketing strategy so no matter how much some people on this site demand that no one contract durum at this price to the CWB and when these same people complained the CWB would not take all their durum last spring (snicker) there will be an equal number of farmers with the opposite strategy.

As far as JDgreens assertion that if we lock our bins maybe our loyal buyers would complain about paying too little for our durum... this will happen the same day farmers COMPLAINING about fertilizer and roundup droping 50% this past summmer and saying all farmers want to pay more for crop imputs! Everyone, durum buyers, farmers, crop input suppliers grain companies, everyone in business want to buy low and sell high. Any socialists on this site want to disagree with me here???