A question for monopoly supporters

[Fransisco]

Where do US durum exports go?

http://www.ndwheat.com/uploads%5Cresources%5C542%5Cdurum-charts.pdf

Italy, Algeria, Venezuela,Morocco, Nigeria,Tunisia, Costa Rica, Portugal,Dominican Republic, South Africa, Portugal, Netherlands, Switzerland.

In other words Europe, Africa and the Middle East, as well as South America.

But noooo, even though the US exports a whack of durum around the world every year, according to the eggheads at the Board the US elevator price can not possibly have any relation to world prices. Give me a break!!

[charliep]

error alert. Second last paragraph should be durum
carryover - not exports. That is, Canada holds about
50 % of the carryover among the 3 major exporters.

[Fransisco]

No problem charlie, I didn't really think they would answer the question anyways.

[Fransisco]

Larry, have you got a web link for the elevator in Fortuna?

[LWeber]

www.newcentag.com

[chaffmeister]

The question really is – does the CWB even understand the argument?

Fitzhenry is just repeating what she is told to say. The CWB is a master at controlling the message and you can be sure they don’t leave it up to Fitzhenry.

The CWB relies on the fact that most farmers don’t have the time or inclination to get up to speed on this stuff. They will warp the discussion in an effort to make farmers think that the argument is about a few farmers near the US border wanting to cherry pick into the US. It goes something like this:

“A few farmers along the US border want to dismantle the CWB so that they can access the US market. They are being completely selfish since they will be able to sell at those prices but what does it do for the rest of the farmers out there that are too far away to gain by it? Not everyone can sell into the US without pushing the prices down to feed values. And then if that happens, even the guys along the border will have lost the benefit of the higher prices you get with the single desk.”

But it’s all nothing but a red herring.



Memo to CWB single desk supporters (and Maureen Fitzhenry) – aka “The Borg”:

In at least the last three years, the US imported from the CWB more durum than the US carryout. This means that, without Canadian imports into the US, the US would export less – or nothing at all. Hmmm.....

Look at this:
Year............Imports..........exports.........c arry out
06-07............41.................40............21
07-08............40.................42............8
08-09............39.................20............27

Without imports from the CWB, they could export:
06-07.....................ZERO
07-08.....................2
08-09.....................ZERO


So Fransisco’s right on the money. They are selling at equivalent to CWB delivered prices. Are they selling Canadian durum? Perhaps. But it really doesn’t matter – its all the same stuff.

Elevator bids in the US are not just a proxy for the world market, they ARE the world market. If the elevator in Fortuna is offering US$7.40 (or C$8.28), then there should be no reason that a Paterson or Dreyfus or Cargill or Viterra in Manitoba couldn’t offer the same – for the same destination.

Makes you wonder why the CWB sells to the US at all. If the US can sell offshore at what equates to the same price back to a country elevator in ND at roughly the same as what the CWB delivers into the states for, wouldn’t we be better off to compete with the US head to head offshore - instead of backfilling their market?

Fitzhenry and the rest of the Borg need to take a course on arbitrage. Why truck all the way down to Fortuna or Berthold when your local elevator could have the same bids?

[farmboy4]

to quote Chaff "It's all the same stuff". Really?! it's not all the same stuff the US has grades other than milling/choice for a reason.

If we want to talk about the world price for durum then let's talk about a grade/quality of durum that the world actually buys. Italy (the largest buyer of US durum, way to go Fran, you got one of my question right... how are the other 3 coming?) is 2/3 HAD buyer (despite being known for pasta, they are not a top quality durum buyer) As are most of the buyers of US durum.

With the exception of the US, Canada and Japan the world doesn't buy "Milling or Choice" Durum. The US elevator prices which are being referenced here are for a quality of durum which is driven by the US milling market and is also the market CWAD is being sold into by the CWB.

[charliep]

farmboy4

Here's your table from USDA.

http://www.ers.usda.gov/Data/Wheat/YBtable26.asp

Quite a bit of variation but the top three US customers are Italy (biggest by far)
followed by Algeria and Venezuela.

Not sure on your point. Yes, there is a US milling market for the highest quality
durum. Terminal durum grades likely are that much different than our 2 and 3
CWAD. It would seem that whether you like it or not, there is a north american
durum with the ability to segregate Canadian and US product to meet customers
needs. The difference between the Canada and the US is price signals and who
controls delivery opportunities.

There is a need for improved durum price discovery and risk management (as
highlighted by CWB in their justification for the $2/bu fpc discount) but these
changes will not occur in the current environment where there is one major
durum seller who likely wouldn't participate.

Tongue in cheek, the current system works perfectly. The CWB forces market
discipline on Canadian farmers which may hold international prices higher
(subject to question given the market knows how much durum Canada has and
will wait until it is offered). US farmers can choose to sell their durum any time
they want at the CWB manipulated higher price.

And yes, most US durum moves out through the Gulf. Most of our durum moves
out the east coast - highest cost transportation and biggest carbon footprint of
any grain.

[LWeber]

In May 1988, Mike Martin, a Canadian Wheat Board employee, who was Manager, Grain Operations - Western, stated in a memo to the Minister of Agriculture and the 4 commisioners at the time that the CWB should not be in the barley, oats or durum market as it was costing farmers money. Mike was shown the door a year later with a severance package paid for by farmers.

21 years later farmers are still saddled with the same old bs.

The CWB has always had an unlimited amount of farmer's money to help protect the status quo... just like Saskatchewan Wheat Pool, Alberta Wheat Pool and Manitoba Pool Elevators did to protect the status quo on grain transportation...

And that turned out well, didnt it?

[charliep]

Keep reading the comment on different grades US and Canada to try to
understand your point. Canada and US sell durum to similar countries likely
based on grade but the real requirements are the terms in the
contracts/specifications. If the CWB and a US grain company are competing,
contract specifications are likely similar based on that customers needs. The US
provides these signals through price. These signals are masked in the CWB
pooling/Canadian grading system.