Zaphods Wheat Comments

[malleefarmer]

Just to reinforce the last thought: If Australia would have produced 20-25 million tonnes of wheat, prices would be at $6, no question.

Its more than just aust crop failure, wheat stocks down world wide, indian crops in trouble, poor wheat last year, thats 06.Weather worries in canada this year 08.

The bar has been raised on what are average wheat prices.

Any comments appreciated

[Zaphod]

You're right that there were other problems, but they were all weather related. The comment was intended to show that a good chunk of market levels are determined by things that simply can't be predicted with any degree of accuracy -- the weather.

Looking ahead to next year, I've seen some ideas that world wheat production could be 640-660 million tonnes based on winter wheat acreage. What happens to $10 wheat if that crop comes in? Who cares about other market factors then?

[charliep]

CWB updated the historical charts today. Hopefully adds to the conversation.

http://www.cwb.ca/public/en/farmers/producer/historical/

Interesting the futures only 2008/09 FPC would net almost everyone across western Canada $7/bu even with an ugliest basis. Basis levels on the first PRO in February have ranged from $6 over to $22 over.

The DPC closed today at $380/tonne (port) or $9/bu for 1CWRS 13.5 delivered Alberta elevator. That compares to the most recent PRO of $6.50/bu same grade/delivered Alberta.

[TOM4CWB]

Dear Charlie,

The CWB has compounded the "single desk" issue by failing to create transparent prices that fairly reflect global market conditions.

If folks thought 1995-96 was a problem... what the CWB has done this year shows just how dysfunctional and out of step they are with world markets... and "designated area" growers alike...

How the CWB handled the DPC and decided the basis this fall on the FPC, would have put a private business under months ago. Instead the CWB doesn't even feel the need to justify the obvious taking of millions $$$ of grain growers revenue without cause or right under contract they were obligated to uphold.

CWB deductions are showing up with no explanation or tracking on where deductions went... these folks are way over the line.

[malleefarmer]

dont get me wrong zaphod was partially agreeing with you, but it was a little more than aust crop failure.

but on the flip side when the inevitable good year comes world wide i still think it wont fall like a rock in water as many suggest

ps about 4 days harvest to go here finally a 2 t/ha wheat crop in the paddock we are currently harvesting.

had as low as 500 kgs per ha or .5/tha

[craig]

I think what we are seeing is a mindset shift from buyers in the world. With bio fuels creating additional demand that confidence that there was always available supplies to buy tomorrow came into question. The serious question now is whether the world will respond as it has in the past and ramp up production enough to return us to surplus stocks. With an increased demand base that also is in question.

[kamichel]

Also corn stocks and extra use in biofuels in the USA is having an affect on all grain commodities. I have heard that if the USA futures on corn go to 450 then wheat can become a plow down with corn planted in place, but all depends on current soybean and wheat prices also of course.
Also Canada is projecting spring wheat plantings to be down some from this year to next. Add in a modest increase of ethanol wheat and we have a modest decline in availlable wheat for export next year.
I am bullish.

[SASKFARMER3]

Canada will not plant wheat if we still have the CWB. We are loosing millions this year and farmers understand that the CWB is not letting them get a fair price for their product.
Farmers will vote again with their drills. and Wheat will be down. All crops pencil in a profit except for good old HRS.

[kamichel]

Unless one has a daily price contract like you Saskfarmer.

[cottonpicken]

In my opinion, if the us fed cuts rates a half point or more(in the next few hours) this will drive prices more than any related "weather" incident.

[Zaphod]

So, how long are you MGE futures? Are you going to hold until $12?