CWB system is padding the pockets of U.S. grain companies

[agstar77]

Could it be the carryout was substantial? Perhaps enough to fill export committments ? Over a million tonnes?

[TOM4CWB]

Agstar77,

What is the point you are making?

US farmers are not stupid... and sell at profitable prices when possible... with out a "single desk" management system... voluntarily?

That "designated area" growers aren't the only people who "price discriminate"... that market discipline occured in an "open market" with out AWB or CWB involvement?

Brilliant deductions Watson!

Myth Busted!!!!

[charliep]

US durum carryover on June 1 2006 was 40 mln bu (1.1 mln tonnes), virtually unchanged from 2005. US durum production was 101 mln bu. Total disappearance about 131 mln bu (exports 47 mln bu, domestic 171 mln bu). Source USDA.

[agstar77]

The only myth busted is that U.S. Co. did not have import Canadian durum to export. Just some of Frans silly #'s.

[charliep]

Should leave alone but there are reasons why durum moves south including quality - have to look at any given year.

Observations - The CWB does control movement of durum into the US. Does this impact price and is the benefit more to US farmers or Canadian ones? With a durum stocks use ratio of 64 % on July 31, 2006 and a US one of 30 % on May 31, 2006, I will let you evaluate.

I also note there are no effective risk management tools either side of the border for durum. Can use MGE wheat futures but spring wheat is not durum and vice versa. A US company is in the situation of only selling durum to export markets/domestic processors as they can forward contract/get farmer deliveries. Semilina/durum processors in the US are better able to do forward contracts with the CWB with risk around pricing being born by the overall durum pool (read farmers).

[charliep]

agstar77

I suspect you are right that the US did not export much Canadian (neither of us can say none). Canadian product does displace US durum into their processors and result in more US durum being exported.

[charliep]

Mistake above - US domestic use 84 mln bu (not 171). US durum disappearance 131 mln bu, exports 47 mln bu and domestic 84 mln bu.

[agstar77]

I suspect U.S. exported lower quality durum and imported higher quality for domestic use, even if they had to pay a premium for Canadian durum. Not quite as simplistic as Fran and parsnip would have everyone believe.

[charliep]

You are right you have to look beyond the simplistic view and look more specifically at price. You are likely right. US exported mid quality and bought high quality for the domestic processing industry. Canada exported high quality durum to the US and stored mid quality into 2006/07 (admitting at a profit). The mid quality (which western Canada had lots of in 2005) was sold in direct competition with Canada into North Africa.

On the premium side, how do you know the US paid the monster premiums (over and above what would be paid for quality). Since we are talking price/payments for 2005/06, can you show the benefit of these higher prices in the 2005/06 total payments (1CWAD 13 protein $193.33/tonne at port, 2CWAD 11 pro $168.83/tonne at port and 3CWAD $152.72/tonne port)? Where did the premiums go?

[agstar77]

I never said monster premiums, and whether the U.S. undercut to get sales, the durum has to go somewhere. It strange that the CWB is always accused of undercutting, when the U.S. is probably a more likely culprit.