Charlie;
I have been looking into CWB spreads in the CWRS grades… and I cannot make any sense of them… I am wondering if you can?
I did CWRS and CPS PPO on July 24th, 2002, and now am stuck with feed wheat to fill it…
My CWB contract was at $235.38/t for #1CWRS 13.5 protein, wheat.
Now the CWB insists the grade spreads are fair, and must be used in calculating my price, so let us have a look… at what the CWB gets for my wheat, and what it costs them.
#1CWRS 13.5 initial $250.20/t (base grade) subtract Canada Feed Initial $128.50
Equal to a feed discount on my contract of $121.70/t.
My Contract price $235.38, minus feed wheat discount of $121.70/t equals $113.68/t payment, minus freight, handling, cleaning, $43.50/t equals $70.18/t net to me.
Now what does the CWB get for this grain?
If I were to buy this same grain, straight back from the CWB, and use it in my own Human Consumption value adding operation… I would be required to pay the CWB…. By the CWB formula for this wheat, $187/t, even if I were to buy this wheat back, for a non-human consumption use (Such as for energy production) I would be charged by the CWB Formula, $170/t… In Edmonton.
I get paid $70/t… and the CWB makes about $10/t on the March Minni. 03 futures profit on my contract… say we are charitable and give this back to the CWB for cost of doing the contract…THE CWB still makes $100/t on my contract.
The need to import corn proves there is a market for my wheat domestically.
Now, lets have a look if I was psychic, and knew the future… and cherry picked the high of the 2002 market. The March 03 Minni. CWB quoted high on October 1st 2002 was, $298.24/t. The feed discount that day was $57.11, leaving a net price of $241.13/t. We must add the Basis of $12.21/t as of July 24th, 2002, then Subtract the #1 base grade from feed grade of $121.70/t… equaling…$131.64/t.
Now we need to subtract the Port handling and transportation costs to get back to Edmonton… of $43.50/t… and we receive $88.14/t. Meanwhile the CWB has put in it’s pocket the March 03 futures difference of, $298.24… minus February 14th 2003 CWB quoted March 03 price of $212.97/t…
…equals a futures profit of $85.27/t… meanwhile I get paid $88.14/t… a total cost to the CWB for my feed wheat, 61pounds/bu, 14% protein… of $2.87/t.
HOW ON EARTH CAN THE CWB CLAIM THESE ARE FAIR “PREMIUM” PRICES WE “DESIGNATED AREA” FARMERS ARE BEING PAID, when the CWB can easily turn around and sell this same wheat for $170/t? Shouldn’t someone be going to jail for this… isn’t it fraud?
Since Chairman Ritter and Adrian Measner say, these are fair and equitable priceing options... and supposed to be responsible for this activity... and they full well know the consequences of decieving and fraudulent behaviour, of those they are responsible to lead... shouldn't they go to JAIL?
I have been looking into CWB spreads in the CWRS grades… and I cannot make any sense of them… I am wondering if you can?
I did CWRS and CPS PPO on July 24th, 2002, and now am stuck with feed wheat to fill it…
My CWB contract was at $235.38/t for #1CWRS 13.5 protein, wheat.
Now the CWB insists the grade spreads are fair, and must be used in calculating my price, so let us have a look… at what the CWB gets for my wheat, and what it costs them.
#1CWRS 13.5 initial $250.20/t (base grade) subtract Canada Feed Initial $128.50
Equal to a feed discount on my contract of $121.70/t.
My Contract price $235.38, minus feed wheat discount of $121.70/t equals $113.68/t payment, minus freight, handling, cleaning, $43.50/t equals $70.18/t net to me.
Now what does the CWB get for this grain?
If I were to buy this same grain, straight back from the CWB, and use it in my own Human Consumption value adding operation… I would be required to pay the CWB…. By the CWB formula for this wheat, $187/t, even if I were to buy this wheat back, for a non-human consumption use (Such as for energy production) I would be charged by the CWB Formula, $170/t… In Edmonton.
I get paid $70/t… and the CWB makes about $10/t on the March Minni. 03 futures profit on my contract… say we are charitable and give this back to the CWB for cost of doing the contract…THE CWB still makes $100/t on my contract.
The need to import corn proves there is a market for my wheat domestically.
Now, lets have a look if I was psychic, and knew the future… and cherry picked the high of the 2002 market. The March 03 Minni. CWB quoted high on October 1st 2002 was, $298.24/t. The feed discount that day was $57.11, leaving a net price of $241.13/t. We must add the Basis of $12.21/t as of July 24th, 2002, then Subtract the #1 base grade from feed grade of $121.70/t… equaling…$131.64/t.
Now we need to subtract the Port handling and transportation costs to get back to Edmonton… of $43.50/t… and we receive $88.14/t. Meanwhile the CWB has put in it’s pocket the March 03 futures difference of, $298.24… minus February 14th 2003 CWB quoted March 03 price of $212.97/t…
…equals a futures profit of $85.27/t… meanwhile I get paid $88.14/t… a total cost to the CWB for my feed wheat, 61pounds/bu, 14% protein… of $2.87/t.
HOW ON EARTH CAN THE CWB CLAIM THESE ARE FAIR “PREMIUM” PRICES WE “DESIGNATED AREA” FARMERS ARE BEING PAID, when the CWB can easily turn around and sell this same wheat for $170/t? Shouldn’t someone be going to jail for this… isn’t it fraud?
Since Chairman Ritter and Adrian Measner say, these are fair and equitable priceing options... and supposed to be responsible for this activity... and they full well know the consequences of decieving and fraudulent behaviour, of those they are responsible to lead... shouldn't they go to JAIL?
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