tower
Since you represent the CWBmaybe you can help me with a question.
From the Questions farmers are asking of the latest GrainMatters, I see the following question: "Why did the CWB sell malting barley at prices that are low in comparison to current market values?"
The arguments make sense to some degree (would reflect why a farmer would hedge as an individual manager) but from an organization that does not grow/deliver malt, why would it short the market 700,000 tonnes (a number I have seen) without having any commitment from farmers to supply barley? Shouldn't they be using at least some risk management strategies without inflicting the pain of lower prices on farmers and creating supply uncertainty for maltsters (CWB contracts say they have to find the barley based on the market signals the CWB provides). This is particularly the case in the current crop year when 2006/07 world barley prices were so tight and US corn prices were moving higher on ethanol demand.
The CWB goes at long ways to helping maltsters with their price risk management and at low or zero cost - I suspect the business was done at what all sides (CWB, maltsters, brewers) considered a fair price (some premium but not enough to prevent the business from being done). Farmers are not granted the same status with significant deductions from pool returns outlooks which are spent on managing the CWB risk relative to the pool accounts. The last set of discounts for the fixed price contract (discounts to the PRO) on April 17 was $21.80/tonne for feed barley and $25.80 for malt barley. Why do maltsters have their risk managed for free while farmers have to pay premiums for fixed price contracts so the CWB can manage their risk relative to the pool.
What role does the CWB have in managing malting barley contract integrity? When farmers have walked on malt barley contracts over the past 6 months, what steps has the CWB taken to encourage performance/enforcement of contract terms? On the other side, in years of lots of barley/high quality, what steps does the CWB take to ensure that malt barley rejections by maltsters are legitimate and the farm managers interests are looked after.
Realize these these questions will be answered shortly when the CWB discloses to the world their new and innovative contracts (not holding my breath) but am always frustated why we can't have these types of questions answered/discussion around this topic. Even the CWB would benefit.
Since you represent the CWBmaybe you can help me with a question.
From the Questions farmers are asking of the latest GrainMatters, I see the following question: "Why did the CWB sell malting barley at prices that are low in comparison to current market values?"
The arguments make sense to some degree (would reflect why a farmer would hedge as an individual manager) but from an organization that does not grow/deliver malt, why would it short the market 700,000 tonnes (a number I have seen) without having any commitment from farmers to supply barley? Shouldn't they be using at least some risk management strategies without inflicting the pain of lower prices on farmers and creating supply uncertainty for maltsters (CWB contracts say they have to find the barley based on the market signals the CWB provides). This is particularly the case in the current crop year when 2006/07 world barley prices were so tight and US corn prices were moving higher on ethanol demand.
The CWB goes at long ways to helping maltsters with their price risk management and at low or zero cost - I suspect the business was done at what all sides (CWB, maltsters, brewers) considered a fair price (some premium but not enough to prevent the business from being done). Farmers are not granted the same status with significant deductions from pool returns outlooks which are spent on managing the CWB risk relative to the pool accounts. The last set of discounts for the fixed price contract (discounts to the PRO) on April 17 was $21.80/tonne for feed barley and $25.80 for malt barley. Why do maltsters have their risk managed for free while farmers have to pay premiums for fixed price contracts so the CWB can manage their risk relative to the pool.
What role does the CWB have in managing malting barley contract integrity? When farmers have walked on malt barley contracts over the past 6 months, what steps has the CWB taken to encourage performance/enforcement of contract terms? On the other side, in years of lots of barley/high quality, what steps does the CWB take to ensure that malt barley rejections by maltsters are legitimate and the farm managers interests are looked after.
Realize these these questions will be answered shortly when the CWB discloses to the world their new and innovative contracts (not holding my breath) but am always frustated why we can't have these types of questions answered/discussion around this topic. Even the CWB would benefit.
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