Report on Wheat from Winterpeg!

[TOM4CWB]

Dave/Mallee...

Down under I started formulating my reponse to the AWB performance in a dual market.... and couldn't help myself when you said...

"nothing absolutely nothing has changed"

That is my conclusion about the CWB... after President Ian White made his presentation to us at the WCWGA on Friday morning January 9th.

It was a grim reminder that Adrian Measner's ghost is alive and well... as our President/CEO claimed absolutely everything the he & the CWB have done... was with the highest level of integrity and best ethical standards...

There must be something in the water in Winnipeg... Commissioner Dahl told me it was 'Blue'!!!

Winnipeg...

A Crime capital of Canada,

A Car theft Capital,

Corruption with biker gangs etc...

Interestingly... it is obvious that CWB expectations and performance standards… meet the approval of a growing and powerful segment of the Winnipeg’s culture...

Who knew… perspective and understanding of what this kind of 'cooperation' can achieve!

Highlights;

The wheat rally in Feb 08 was "a messy run up"; as CEO White showed the Jan 08-Nov MGE Spring Wheat graph chart…

The performance of the CWB was "What any one of us would have done";

Perhaps Dispatch earnings will be significantly reduced... since our ocean freight rates have dropped from $100,000/day... to $10,000 - $3K/day...?
But then again...perhaps not... Has the CWB has 'leveraged' the shipping companies (using the power of the 'single desk') to maintain 'premium' shipping rates for us for the next crop year…? No plan details or volumes were shared with us.

'User Friendly' Producer Pricing Options (PPO) proved once again... (the CWB being the ‘USER’ to those growers not Friendly’ to Pools)

That these PPO’s have a high degree of failure...in every test and standard of competent financial/risk management the CWB measures...
Obviously these are therefore standards of performance CWB managers apply in all areas of CWB operations...!!! The CWB is famous for sharing equally... and pooling its talent...

Surely we will not be disappointed… when the Financial’s are released!

All will be forgiven… when the loss of well over $100m is looked at in the shining light… of a pool performance…

BECAUSE 07-08 CWRS values were increased from over $6/bu… to well over $8!!!
And think of it… a pool in 08-09 worth well over $6/bu… once again!

AND market power that entitles our customers with the lowest prices avaliable... with the highest quality... anywhere!

These performance entitlements themselves MUST entitle CWB managers to a 30% BONUS!!!

JUST THINK...


These wise CWB people spent 10’s of millions… in one of the hottest economies in history… to create a dazzling jewel… at 423 MAIN!

I can hardly contain myself … for the financial prowess this institution contains… it left me …
speechless (which is why I didn’t tour the CWB building on January 8th)!!!

President White boasted…unabashed… that CWB operations have 'stood the test of time'...

Informa reported on the morning of Jan 8th …that this type of performance in the high quality wheat market has allowed CWB wheat market share globally to decrease from 22% in 1960 to 14% in 2008. Review of Economics dictate that 15% market share is required to retain 'market share' power.

Informa deliberations confirm that …US DNS Export prices are relevant comparisons to CWB CWRS pricing... because of the fact that the US exports approx. 60% of this wheat. Confirmations again that CWB inefficiencies cost growers over $30/t for those who use the pool... in this high quality wheat market. It was not exactly quantified... but suggested that returns for those who used the DPC... lost a further $100/t. I tried to get an answer how much more was lost by FPC/BPC PPO contract holders... noone dared to investigate this.

This is a major factor creating the discrepancies between CWB and US DNS prices. THe pressure and trade actions at the US Border.

It has been confirmed that the private trade does a better job of extracting market power premiums on Canola... than the CWB does on barley... which I have claimed for many years… and that Japan is the lone nation… where the CWB can claim ‘price discrimination’ premiums. As Canola marketers discriminate on prices as well… CWB 'single desk' claims of premium extraction… melted...

The CWB has 50% of world trade of Durum... yet Canada only produces 15% of the Global Durum production.. resulting in the top 6 markets the CWB has developed... having no 'market power' premium earnings in these 'core' markets...

And we growers are to be eternally grateful… as the CWB replenishes our year end carryover stocks… reminiscent to the favours done for ‘designated area’ grain growers of the early 1930’s.

I came back to Alberta… so very enthusiastic… with new meaning and vigour in my very being…
That once again… I AM REQUIRED TO forgive these managers at the CWB… each morning as I awake…
FOR

‘BUT FOR THE GRACE OF GOD… THERE GO I’!!!

[chaffmeister]

The CWB has over 50% market share in global durum exports.

The CWB states it gets premiums in durum marketing.

The Informa study showed that in many durum markets, the CWB enjoys over 90% of the imports, and over 90% of the total supply in those markets (little or no domestic production).

Reading that made me wonder: if the CWB is virtually the only game in town in many markets, how do they know what price to sell at? How do they know they're getting a premium? If they're the only seller, over what price is this premium they are getting?

Inquiring minds want to know.....

[TOM4CWB]

Chaffmeister,

A big factor in the Durum market... is high quality DNS.

Direct subsitution can be used (as a % of pasta)... when the Durum market gets too far out of line (too high vs DNS in particular).

This also provides a real baseline for trading.

[classicalliberal]

I was reading in a newswire about a month or two ago that Iraq bought some black sea, Canadian and South American wheat and it was bought by Iraq at $30/mt US cheaper than any offer from US exporters. The likely reason for this is that the other countries including Canada's exchange rates have devalued relative to the US and the prices look attractive. What is bad about it is that the reason that the US exporters didn't offer it out is that the basis was too weak relative to the futures (which are traded in US). When you have weak basis and big carries in the market, it is an incentive to store grain until later periods until the basis strenghtens or the spreads narrow to flatter or inverses and then the grain moves. The private grain industry would build storage to arbitrage the weak basis and pick up the carries and thus they will not offer grain out unless it is at profitable basis levels because they can pick up the storage and carrying charges in the market. As a result of this, many others will arbitrage the weak basis which thus pushes the basis up relative to the futures markets. End users will have to pay stronger basis levels in the nearby to get the grain out. This is obviously not the trading policy of the CWB and they are just selling at whatever they can get. They can't say they are getting premiums when they are selling it for less than the Americans would.

[Hopperbin]

Let's not even mention the millions of bushels the Chinese are bidding for malt barley today. And they think we don't have any. Did I mention we have malt barley for sale?

[Hopperbin]

I have an idea.
Instead of giving the CWB a no show on Friday like normal maybe we should all show up and drill them on the China Malt demand. There is a lot of thirsty dudes making Chistmass toys over there and I think they need a few brews.