Who needs the CWB?

[chaffmeister]

bucket:
I'm no rocket scientist but I've done the analysis you ask about.

About half the canola crop is delivered by Dec 31 each year. This overwhelms the grain handling system with canola stocks and prices drop in order to clear the excess to price sensitive markets like China and Mexico.

The reason for this excessive delivery of canola early in the year is cash flow. Something you don't get from CWB grains.

I'm not an economist but I know there is no doubt a sophisticated model to measure this. I took a simpler approach. Price pushed down by $20 to $30 a tonne on 4.5 mmt adds up to about $90 to $135 million.

I just considered basis weakness. If you considered total flat price (canola prices are seasonally lowest around harvest), the hit gets much bigger.

I always consider this when I think of the cost of the CWB system.

[chaffmeister]

bucket:
I'm no rocket scientist but I've done the analysis you ask about.

About half the canola crop is delivered by Dec 31 each year. This overwhelms the grain handling system with canola stocks and prices drop in order to clear the excess to price sensitive markets like China and Mexico.

The reason for this excessive delivery of canola early in the year is cash flow. Something you don't get from CWB grains.

I'm not an economist but I know there is no doubt a sophisticated model to measure this. I took a simpler approach. Price pushed down by $20 to $30 a tonne on 4.5 mmt adds up to about $90 to $135 million.

I just considered basis weakness. If you considered total flat price (canola prices are seasonally lowest around harvest), the hit gets much bigger.

I always consider this when I think of the cost of the CWB system.

[bucket]

And that is on just one commodity. Pretty safe to say billions have or will be lost.

[stubblejumper]

wouldn't the same happen to wheat if everyone tried to market all before DEC.

[bucket]

Maybe but basis levels would discourage delivery if they didn't need it. Then the other crops would move.

Its about knowing what is the best thing to deliver at the right time or what works for an individuals farm.

The cwb currently knows there are farmers who don't start hauling wheat until June. They just have to re allocate the deliveries with a simpler program.

[chaffmeister]

Sure, but why would you?

In a completely deregulated market:

- you would get better market signals on all crops

- to pay your bills, you could sell a little wheat, a little canola, a few peas - whatever looked the best at that time

- all crops would need to compete for deliveries, so when wheat prices look good, you sell wheat.

- if a crop gets more deliveries than the system needs, the basis adjusts - just like if not enough is being delivered, the basis adjusts the other way. (It's a proven fact that price is the best method to ration the supply of grain handling services)

- you could take advantage of carrying charges in the market that would actually pay you to store grain - any grain

- you could respond to differing market signals to move the one that makes sense. When canola is paying you to store but wheat isn't, you could actually move wheat and store canola (instead of being forced to store wheat and move canola like you are now)

- you would have a more efficient system so that the prices you got were more realistic in comparison to other markets (like the US) - in other words, more money for your grain.

Total grain marketing would have a greater impact on your bottom line than just canola marketing. There would actually be things you could do to maximize your returns that you can't do now.

[rbgordon]

Barley Poll
The barley poll question conducted by the Southwest Booster.

Should the federal government remove barley from under the control of the CWB?
Currrently at 11:20AM Feb. 5
Yes: 80%
No: 20%

Had been as high as: 93 - 7

You can register your vote by going to:
www.swbooster.com

[chaffmeister]

Two days ago wilagro said he had only voted 3 times.

Wonder how many times he's voted now.

[wilagro]

chaff: Your're a riot. The vote is now 79/21. I just voted again and got the stats.

[charliep]

Perhaps should review the CWB survey.

See page 17.

http://www.cwb.ca/public/en/farmers/surveys/producer/pdf/survey_062107.pdf

Will be interesting to see the results of the 2008 survey.