Canada Slips on CWB

[jdepape]

The grain companies DON'T make $50 handling durum.

Here's the breakdown:

CWB costs (gross)....30.09
Trucking.............8.09
Primary elevation....13.00
Cleaning.............5.08
CGC weighing/insp....0.38

CWB trans svgs.......(1.70)
Trucking prems.......(6.47)

Total................48.47

BTW - before you question the CWB costs, unfortunately they are not from the annual report so they can't be tested. The CWB provides its numbers directly to the Grain Monitor based on what it believes its costs to be.

The grain companies' revenues total about $18/tonne - I left out the trucking premiums they pay out because they also get multi-car shipping incentives from the RRs that aren't factored here.

[cityguy]

so the $30 is what - the cost of going from thunder bay to the st.lawrence? Appears as though it's a durum specific cost as the wheat is a lot "cheaper". Guess that's why there isn't a lot of canola that goes out of the east coast. Also - what's the $8.00 trucking? And does the canola $6.00 revenue also including the cleaning that companies charge on canola?

[chuckChuck]

If you look at a long term comparison of USDA prices paid to US farmers and the historical CWB prices you will likely find that US and Canadian average weighted prices are fairly similar. Keep in mind that US farmers have the advantage of larger domestic usage and lower freight costs in many areas, that increase net returns to producers. The US is often a higher value market than many of the other world markets in Asia and South America that we also sell to. It is such a joke to read some of the BS that is written in Agriville. Without detailed data from the world market on a day to day basis it is not possible to know what the hell is going on. Not to mention most of you have little or no experience on the sales desk of any international grain trader. Just look around your neighborhood to see the numerous management/marketing errors that farmers make yearly. 1.Monopoly sellers have an advantage. 2. The CWB pool returns will lag cash spot prices. 3. We can't sell all our grain in the US.

[bucket]

chuckchuck

Anytime you would like to provide proof of what you have just said - post it.

A couple of years back when the cwb forcibly held back durum through the calls, when I finally hauled durum it was $20.00 a bushel.

And I could only haul in a portion. The american farmers that had held it for that long would have been getting $20.00 a bushel and hauling 100 percent of their contract.

I don't think your comaprison is sensible for my farm.

[TOM4CWB]

Chuckchuck,

Western Canada produces canola... and the price day after day is higher than in the US.

Plus we have a domestic crush industry... that has increased competition to the point where this value added industry arbitrages UP international prices.

Your excuses for a system that depreciates competition and costs 'designated area' growers to hold and store grain for millers everywhere... is more than frustrating.

A 'Single desk' monopoly with bottomless pockets.... is just like CN when the Gov of Canada when owned it and the people of Canada paid the bill. CN lost Billions... when a B was a T. CP was stuck with CN killing them.

Before 1990 the CWB single desk allowed 'designated area' grain growers an opportunity to market on their own. If higher value was available outside the 'designated area' grain handling system... arbitrage occurred and growers prospered.

Organic growers are allowed to market and export wheat, barley, and durum with only a service charge... and the sky has not fallen in on the organic grain market.

Wheat prices have not fallen through the floor in Ontario since they deregulated.

There is more than ample evidence that what the CWB 'single desk' does... EXTRACTS value from 'designated area' grain growers pockets... which is exactly why organic growers were allowed to market their own 'designated area' CWB grains.

Even the Canadian Federation of Independent Business agrees that market arbitrage will prosper our local economy... not lower values.

It is SICK that ORGANIC growers are allowed be directors and to hold the balance of power at the CWB... and wreck my farm and local community.

If I could grow all Canola... I would. I can't... I must grow wheat /barley to keep disease down in rotation of broad leaf crops. If I grow corn the fusarium will wreck my wheat/barley.

Your excuses to take the easy way out... and fail to market FOR 'designated area' grain growers... instead making us your slaves... burns me big time.

'CANADA SLIPS on CWB' IS BOTH FACTUAL... AND TRUE.

wE wILL nEVER SURRENDER.

MAY dON REST IN pEACE...

gO rIDERS gO!!!

[TOM4CWB]

bY THE WAY cHUCKCHUCK,

PPO prices lag also lag cash prices in the US... Pooled CWB prices lag US prices going up by months... and follow in tandem second by second on the way down. Millers make sure the CWB marketing dept. gets it on a second by second... blow by blow... depreciation of my inventory... which the CWB refuses to pay me the carry in the market... and keeps.

The CWB 'single desk' system is SICK... Sick... sick.

The CWB 'single desk' system is SICK... Sick... sick.

The CWB 'single desk' system is SICK... Sick... sick.

Get it Chuck?

You of all people should know better.

gO Riders gO!!!

[Fransisco]

It really is amazing how CWB groupies just repeat the same false arguments again and again.

chuckchuck, comparing pool returns to usda weighted average prices is no better than comparing them to US spot prices in fact its probably a worse comparison. No farmer in the US actually receives the weighted average price, lots of Canadian farmers actually get the pool price. The USDA average weighted price is mixed bag of premiums, discounts, grades, contracts and quality levels including feed. And on top of this they use a different cropping year, they go May-June, CWB goes August-July.

But since you insist on going there let me point out that in 02-03 the CWB pools did worse than the weighted average price in everything other than durum. In 03-04, 04-05 and 05-06 the board did worse on every single crop. You can find this data in the informa wheat board report. Even when you stack the best quality board crops against the mixed bag USDA weighted average the board has a hard time beating it consistently.

You talked about US domestic usage. again from the informa report. " Some observers have pointed out that US elevator bids are not a useful comparison because the wheat, durum and barley markets in the US are limited to domestic consumption only. This statement ignores the fact that the US has exported an average of 58% of its spring wheat production and 44% of its durum production, indicating that elevator bids in the US are not simply based on domestic use, but also reflect export markets."

as to your 3 points...

1.) The only thing the CWB has a monopoly over is Western Canadian farmers who have no choice but to sell to the CWB. Check the market share data from the CWB annual report and you'll see that it doesn't have any where near the market share to be called a "monopoly seller".

2.) You say, "The CWB pool returns will lag cash spot prices." Yah, by 2 years! At the end of which you get lower than the average open market price! This argument does not work in your favour chuckchuck. Even if the board did eventually get you the same price everyone knows its better to get your money now rather than 2 years from now.

3.) The reason we look at US prices is because <b>its the nearest actual open market</b> not because we think we can sell all our wheat there. Duh!

Just once I'd like to see a boardie tackle the arguments head on without twisting them into straw men. I actually don't think its possible.

[jdepape]

cityguy:

No, the $30 is not the cost of going from Thunder Bay to the St. Lawrence. (The St. Lawrence is already the official pricing point of CWB grains - along with Vancouver.)

The CWB has never broken down these costs publicly.

Wheat is a lot cheaper? Wheat is $29 and canola is $6 - and you say "wheat is a lot cheaper" than durum? Yes, it is - but you're avoiding the issue - CWB grains are more expensive that non-CWB.

I get the impression you really don't like these numbers and what they say.

The $8.09 trucking is what the Grain Monitor has assessed for trucking from the farm to the elevator. On canola its the same.

The $6.00 revenue on canola represents the price difference between the street price and the instore Vancouver price. The graincos don't charge cleaning as a set fee like with CWB grains. They buy canola in the country and sell canola offshore - if they do their job well, there is positive revenue to cover all their costs and make a profit.

[jdepape]

chuckChuck:

I see Fransisco has beat me to the punch so I'll just add to it.

The USDA weighted average prices represent spot marketings by farmers. So, as Fransisco says, it includes all grades. But, to me, more importantly, it does not include forward pricing on deferred delivery contracts. Many farmers in the US forward price a portion of their crop early in the year - around seeding time (or before) or during the summer.

I know a farmer in Montana that forward sells at least half of his crop around seeding time, bagging a very good price (covering input costs and then some) and then pricing the rest later.

Also, once he delivers, he may buy futures to continue to gain by market strength through the crop year.

Comparing CWB pool prices to "weighted average" US prices is a mug's game (it's futile and meaningless).

What is not futile is comparing the CWB pool price to what the market offered over a crop year. If you hire someone to market your grain for you, most people would assess his performance on your behalf by comparing what he got for you to what was available in the market.

If you compare the pool return to "the market", the pool return fails badly.

I just wrote about this on my blog:

<a href=www.cwbmonitor.blogspot.com>CWB Monitor</a>

[jdepape]

One more thing...

One more reason why the "weighted average" argument doesn't work: Year after year,

<b>the Pool return is lower than the lowest US street price over the crop year.</b>

So - if the Montana or North Dakota farmer sold everything at the low of the crop year, he'd still be paid more than you in Saskatchewan.

I have the data if you're interested.