Average US Malt Prices beat CWB Pool

[FarmRanger]

So, it begs the question, why is our average CWB price so much lower than an average price that is geographically close?

Let’s see, we have a large monopoly buyer with forced sellers below them on the supply chain who cannot legally access higher paying markets elsewhere.

Nope, I can’t figure it out.

[bucket]

Vader you trapped yourself on this one.

You say don't compare the US prices because few sales from the US at these levels doesn't increase the weighted average BUT you said the cwb is making significant sales at these levels THEREFORE our prices should be higher than the US.

Why are we so far behind???

I suspect you to hide now and not answer!!!

Double talk your way out of this one!!!

[LWeber]

"To fairly compare agains (sic) the PRO you need to multiply the volume of grain sold every day by the daily price and then divide the cumulative total by the yearly total sales."



Uh Rod, the USDA does this.

FACT

On no grade no protein wheat (a WEIGHTED average of all HRS wheat sold) the U.S. farmer outperformed the CWB pooling system for 1 CWRS 13.5 by 81 cents.

FACT

Apples to apples they were 81 cents higher than the pooled price.

FACT

For the last 5 years, the data indicated the U.S. outperforming the pooled price.


FACT

The weighted average number is used to determine insurance payments in the U.S.
They don't screw with it.

When was the last time a benchmarking exercise was completed? Or is once enough every 10 years?

Go ahead, hire someone, pay them with farmer's money to tell you how great thou art.

But don't let facts get in the way of your Pro-CWB rant and delusions.

[chaffmeister]

OK Vader, I'll bite. (I see Bucket beat me to it, but I'll add to it anyway.)

I agree. As markets move higher, there is less and less volume traded. The buyers peter-out.

But don't forget. As markets move lower, there is less and less volume traded. The sellers peter-out. (I know, I know. You think farmers have little market power, but let me share with you an old market maxim: "Never sell a market that the farmer won't."

Anyway, the point is most of the volume does indeed happen - on average - in the mid range of prices (of course, every year's different). (I'd send you a chart if I could.)

Don't hang your hat on weighted averages because, as the CWB and you have stated, the CWB is "disciplined" and sells equally throughout the year - something a blind, one-armed monkey could do. The pool results would be roughly the simple average of the year. So then the CWB results SHOULD be pretty darn close to the average of the year. (And the CWB uses the US prices as a benchmark to determine the prices it sells.)

Conclusion - the average price in the US is indeed a relevant comparison.

[Fransisco]

Game set and match going to...Chaffmeister.

[chaffmeister]

With the assist going to LWeber.

[chaffmeister]

I want to be clear on something.

Fransisco started this thread with a comparison of Montana prices and Alberta prices. My understanding of the Montana prices is that are not weighted averages.

LWeber states correctly that USDA weights prices for a variety of reasons. Although that would be a different price series than the one presented by Fransisco, those data are available and relevant.

I've used both in different analyses - and they both give the same or similar results vis-a-vis CWB returns.

[charliep]

Perhaps Vader has provided a good explanation of why CWB total payments for feed barley pool where higher than malt barley in 2006/07. Both payments were below what an open provided for domestic feed barley. I know this well thought explanation will be in annual report but maybe Vader can give an early preview. For those who can't remember, the link to 2006/07 CWB payments is below (http://www.cwb.ca/public/en/farmers/payments/pdf/2006-07_tonnes.pdf) last 2 pages.

Vader are you a supporter of the CashPlus program? It is a substantial change from previous CWB iniatives (farmer prices/payments matched directly against sales versus all PPO programs related to the pooled payments/risk management to minimize impact). This is particularly the case on the latest CWB offers to the maltsters/selectors.

From the presentations at the combine to customer, where is the CWB going a wheat PPO programs?

[bsigg]

http://www.grains.org/page.ww?section=Barley%2C Corn %26 Sorghum&name=Barley

[charliep]

bsigg

Trying to understand. The CWB making conscious decisions not to participate in the US market is a good thing? What Canada's competitiveness with other exporters (Australia and Europe)? Why hasn't Canada been able to expand market share in recent years when both the latter two regions have had crop failures/quality problems? How far along is the CWB in hitting some of the targets set out in their long term market strategy 5 years ago? See page 19.

http://www.cwb.ca/public/en/library/publications/popups/pdf/long-term_forcast-2011-12.pdf

To put the Canadian side in perspective, western Canada grows around 10 MMT of barley. About 60 % is malt varieties (6 MMT potential selectible malt barley). In any given year, about 2 MMT is selected (1 MMT exports seed, less than 200,000 tonnes domestic malt product and 800,000 tonnes exports.