A question for monopoly supporters

[furrowtickler]

Grain bug, kinda silent eh? Same old story everytime - never can dispute actual facts when they are as clear as day. Same as every other borg suppoter. It has been the same every time S/F or Larry Or Tom brings up a ligit callenge - nothing but b/s dribble from borg clowns then you can hear birds chirping everytime.

[GrainBeetle]

Furrow:
The first farm truck loaded with durum that threatens delivery into the US will arbitrage the price differential (if there is in fact one) between the US and Canada.

Franny: Even Larry Weber recommends selling in increments, but I guess you are smarter than he is(and all of us) in that you can always pick off the top US spot prices.

http://www.emap.usask.ca/so_player/?fp=MarketProspects/Low/April_11.flv&w=240

Hey LWeber:
What happened to your FX prediction for the coming year?

[LWeber]

Divide and conquer eh Beetle...

same old - same old BS from the same old people...

except this time - the divide is getting too big to quash...

[LWeber]

When Deanna takes your nipple rings off Beetle, have a read here...

http://www.cropproductionshownews.com/News/Day-Four/When-canola-hits-$10-again,-sell.aspx

[farmboy4]

Charlie,

My point is simple, the choice milling market, is a market based on the US market not world markets. If you want to talk about the 'world market' for durum you have to, at a minimum, look at the lower quality durum that the US actually exports. And why don't you get out your google-machine and tell me what the world price is for this non-US milling market? And while your at please explain to me how collapsing that US milling market (i.e. arbitraging it to a small premium over the 'world market' i.e the non-US market) is good for the Canadian farmer? And please consider the impact of lowering the US price structure on all sales to the US that the CWB currently makes, not just the incremental tonnage.

Anyway, I am just going to curl up on the floor and suck my thumb because it is obvious that I am unable to compete on the same intellectual and factual level as the WCWGA and the Alberta gov't brain trust.

Actually I really don't care if you answer my questions or ridicule my opinions, because I have already wasted enough time on this "Marketing Forum".
But then again according to them all board supports are either decrepit old men or hobby farmers, so given that I am an under 30 farmer, I don't actually exist...

[charliep]

Perhaps we can agree that there is a need for better price and market signals on
durum. It would also be interesting to understand the quality needs of different
customers and their willingness to pay for specifications. You are right - hard to
find a gulf durum price but you can find a Minneapolis milling and terminal
durum prices. Perhaps a challenge back would be to provide CWB sales prices.

We can also agree that the US farmer is provided pricing signals everyday that
provide basic information for decisions and the market works to supply the
needs of all customers from the most quality specific to the most
discounted/lowest quality product. This information is readily available as cash
bid including premiums and discounts. US farmer also carry significant amounts
of durum between crop years but that is their decision - they can make it based
on their business needs without single desk.

[charliep]

For what its worth, it is interesting to take the methodology used to determine the $563
mln benefit of Canadian farmers/CWB single desk over US ones and apply it to 2008/09.
It this was a valid process a year ago and used in CWB press releases, shouldn't the same
comparison apply this year?

http://www.ers.usda.gov/data/wheat/YBtable18.asp

Weighted average US durum prices (all grades) June to April (not including May and not
converting to this past years lower valued loonie) was $10/bu. I will let everyone compare
this to your last PRO for 1CWAD 13 protein.

[farmboy4]

Charlie,

You asked some good questions and raised some valid points, so I will respond. And let me say this, I don't think the CWB system is perfect, but I do think it is a benefit to me and all other farmers.

I will take your word that the CWB arrived at their $563 million benefit (refresh my memory is that number durum only or all CWB grains?) using the simple method you describe. And I would comment that it was not a valid comparison last crop year when the CWB used it to its benefit, so I don't agree that it is a valid one this year (and I note that you didn't comment on its validity... only asked the question).

But I would argue that it is likely a more valid(but still not a sound one) comparison in years where world durum supplies are tight and both Canada and the US carryout is tight (i.e 2007/08).

[charliep]

The $560 mln came out of the response to the Informa report and you are
right included all wheat including durum. The best table is in the
August/September 2008 Grain Matters. It has been referred to in other
places but not aware of anywhere the table was included or whether the CWB
full analysis was posted.

http://www.cwb.ca/public/en/library/publications/popups/pdf/gmatters/au
gsep08.pdf

You are also right I won't put to much credence in it for an individual year.
Each year will be different and reflect individual circumstances.

It should be over time a performance measure with as many years the CWB
selling for more than the US and vice versa. If the CWB uses this information
in one year to highlight a position that supports them, then they had better
be prepared to also talk about the years that don't work.

To the original posting, US and Canada compete in many of the same export
markets with prices having to be competitive. In many customers eyes, there
is not likely any difference between a US 2 HAD or a Canadian 2CWAD - they
likely buy based on specifications and not grade. Similarly, prices to the
north american milling durum market are not likely to be too far out adjusted
for transportation. The question about whether US prices are higher because
they satisfy a higher percentage of the North American durum market needs
to be questioned and from there, why any organization would make a
conscious decision not to participate in higher priced market (or encourage
its farmer clients to). I will always question the statement the CWB can
manipulate prices by withdrawing from the market (or limiting supplies) and
if this is the case, whether our competitors benefit more than western
Canadian farmers (the higher prices go in their pocket if they sell).


As a final comment, you will have to help me understand the risk
management practices for durum FPC contracts. They seem to me to be
expensive and ineffective ($2/bu discount from a market based forecast). Is
there an effective way to hedge durum? Why not treat the durum milling
markets like malt barley and have a cash plus program that tie individual
sales contract to millers to farmer pricing opportunities?