Let’s clear the air with some facts about the CWB and the domestic market:
1. In the event that a domestic processor (like an ethanol producer) sells bi-products into the human consumption market, it must purchase from the CWB the volume of wheat required to produce the volumes of these bi-products. The “wheat equivalent” volume refers to the average wheat to flour milling ratio of 1.38 to 1.00 (last time I checked). In other words, for every tonne of flour that a processor sells, it must buy 1.38 tonnes of wheat from the CWB.
2. The CWB’s industrial pricing policy is market based – just like its Domestic Human Consumption (DHC) price.
3. If the plant produces nothing for human consumption, it does NOT need to go through the CWB.
Unless things have changed drastically recently, these are facts – contact the CWB in Winnipeg if you don’t trust me. Jim Thompson is probably your best bet.
So Vader. Puleeeese – stop this misdirection. Let me make it clear – again. The CWB sells domestically at market-based prices. Market-based. No premiums. The CWB’s own policy. No premiums. Your idea that Husky wouldn’t look to the CWB for its feedstocks because “it knows that the CWB’s mandate is to maximize revenues for farmers” is just plain dumb.
So tell me, knowing that the CWB sells at market prices (like everyone else would) why DOESN’T Husky buy from the CWB?
Dumb statement #2: “The CWB is completely powerless to add value for producers when someone else is willing to bid lower.”
So, this “someone else” would be AU. AU goes out and offers (not bids) a real stinker of a price – and of course Husky bites and buys a whole bunch at this really low price. Just so we have a number to refer to, let’s say it was $2.00 a bushel. But other ethanol plants are up and running, and there's a pretty decent domestic feed demand for this wheat. And everyone else is selling to these plants and feeders at $3.00 per bushel. So now AU goes out and tries to buy feed wheat at say $1.85 - to satisfy its sale to Husky and make a little for its troubles. But for some reason, they can’t seem to buy any wheat because the “market” is at $2.85 a bu.
The moral of the story is: don’t offer lower prices than the market.
CWB-huggers really miss the boat on this one. Over and over again they assume that grain merchandisers will compete on price until the price goes to zero. They forget over and over again that these same grain merchandisers also need to go out and buy the stuff as well. But I guess that’s understandable since the CWB has never had to worry about the “buy” side of the ledger.
Vader, you have not described how a "dual/open" market functions, as you think. However, you have made it clear that, without single desk authority the CWB could not compete in the domestic market because it brings absolutely no value or benefit to that market.
1. In the event that a domestic processor (like an ethanol producer) sells bi-products into the human consumption market, it must purchase from the CWB the volume of wheat required to produce the volumes of these bi-products. The “wheat equivalent” volume refers to the average wheat to flour milling ratio of 1.38 to 1.00 (last time I checked). In other words, for every tonne of flour that a processor sells, it must buy 1.38 tonnes of wheat from the CWB.
2. The CWB’s industrial pricing policy is market based – just like its Domestic Human Consumption (DHC) price.
3. If the plant produces nothing for human consumption, it does NOT need to go through the CWB.
Unless things have changed drastically recently, these are facts – contact the CWB in Winnipeg if you don’t trust me. Jim Thompson is probably your best bet.
So Vader. Puleeeese – stop this misdirection. Let me make it clear – again. The CWB sells domestically at market-based prices. Market-based. No premiums. The CWB’s own policy. No premiums. Your idea that Husky wouldn’t look to the CWB for its feedstocks because “it knows that the CWB’s mandate is to maximize revenues for farmers” is just plain dumb.
So tell me, knowing that the CWB sells at market prices (like everyone else would) why DOESN’T Husky buy from the CWB?
Dumb statement #2: “The CWB is completely powerless to add value for producers when someone else is willing to bid lower.”
So, this “someone else” would be AU. AU goes out and offers (not bids) a real stinker of a price – and of course Husky bites and buys a whole bunch at this really low price. Just so we have a number to refer to, let’s say it was $2.00 a bushel. But other ethanol plants are up and running, and there's a pretty decent domestic feed demand for this wheat. And everyone else is selling to these plants and feeders at $3.00 per bushel. So now AU goes out and tries to buy feed wheat at say $1.85 - to satisfy its sale to Husky and make a little for its troubles. But for some reason, they can’t seem to buy any wheat because the “market” is at $2.85 a bu.
The moral of the story is: don’t offer lower prices than the market.
CWB-huggers really miss the boat on this one. Over and over again they assume that grain merchandisers will compete on price until the price goes to zero. They forget over and over again that these same grain merchandisers also need to go out and buy the stuff as well. But I guess that’s understandable since the CWB has never had to worry about the “buy” side of the ledger.
Vader, you have not described how a "dual/open" market functions, as you think. However, you have made it clear that, without single desk authority the CWB could not compete in the domestic market because it brings absolutely no value or benefit to that market.
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