CWB Pro down 17 cents per bushel on Malt

[kamichel]

When most sales were finished should this price not have been reflected months ago.
So the CWB over inflated the pro on malt in order to get farmer deliveries. IMHO

[kamichel]

Explanation bye the CWB for reasons of the pro decline for 06 07.

World malting barley prices have been pushed to this year's high levels primarily by production problems in two of the three major global malting barley exporters, namely Australia and the European Union. New crop supplies will not be available from these regions for some time, which is expected to support global prices until early summer.

In this environment, the federal government's stated intention to remove the single desk on barley August 1, 2007 is negatively affecting 2006-07 projected returns. As a result of significant market uncertainty caused by this potential policy change, the CWB has reduced the projected size of the 2006-07 designated barley pool. Many customers are now in a wait-and-see-mode, holding off on purchases in the hopes that malting barley values will decline as new crop supplies become available. Customers are also reluctant to make purchases as they are anticipating their ability to access supplies from multiple sellers at values lower than a single-desk seller. This means previously projected sales at current high price levels will not materialize for the 2006-07 pool. In addition, higher spot prices in August are expected to erode farmer deliveries previously expected in the 2006-07 pool.

[kamichel]

OOps guess this is already being talked about in another thread.

[charliep]

The quote is valid.

I note that malt plants are a manufacturing operation that needs a steady stream of product. When you have brewery customers that you have made sales to, you have to have your plant running and having ongoing farmer deliveries to meet these sales (no waiting). There is no waiting until August.

Malt plants also manage their price risk. To suggest that maltsters would go into this summer with totally uncovered malt barley purchases is a misconcept at best. Everyone on the planet (including maltsters) can read a corn S&D and from there recognize the risk of doing nothing. That is why the maltsters are heavily covered on their 2007/08 sales to brewers.

[charliep]

Will clip and paste from another posting I made.

I take the following quote from the response to the "Barley Market Signals Report", Cereal Grain Value Chain Roundtable.

Quote "The CWB works closely with domestic maltsters to assist in developing offshore markets to maximize malt sales and, therefore, value-added processing in western Canada. The CWB offers forward pricing at world levels for barley of similar quality so our processors can compete with the EU and Australia. The domestic maltsters will run their plants at near-capacity in 2006-07. This is the CWB’s largest malting barley market (at 1.1 million tonnes)."

I would hold the CWB to their last commitment to the value added industry in western Canada.

I was apart of process in participating in the barley working group, cereal grain value chain round table. Participants could agree on 90 % of industry. The last 10 %, there was agreement. Western Canada has a disfunctional supply chain at best.

[TOM4CWB]

Charlie,

As was brought out briefly before... this must be primarily based on 06-07 contract non-delivery... and would likely be a cash back payment to CWBAgents to compensate for "undelivered" contracts.

1.)Bottom line is there is not enough contracted barley to fill CWB contracts to CWB Agents,

2.) The CWB is unlikely to have matched producers to sales back to back... they appear like they got caught napping and speculating... just like the AWB.

3.) The $25/t non-delivery fine at this point... on the tonnes counted, contracted... but not delivered... at a very low pool price (now very much worse)... this speaks volumes to a serious management problem at the CWB.

Little wonder the CWB does not want competition... They already have/had competition... and failed to manage it effectively BECAUSE of the "single desk".

How could the CWB have possibly done worse in 06-07? Selling barley at the bottom... to aggressive barley buyers without assured back to back supply has been the type of mistake that was the end of many a grain company.

It certainly looks like CWB managers didn't care... cause they were planning on blameing Minister Strahl and PM Harper all along.

Will we reward them for this?

[Vader]

Or you could reward Strahl/Harper!

[TOM4CWB]

Vader,

Thanks for the confirming my points... as usual first response is the most honest.

[kamichel]

Tom could they not have seen this coming?
It would not cost much to probe these guys bins before it left for feed.

[ProFarmer]

Maybe it has finnally hit home the malters thought they could run the cwb. They were getting a cheap source of feed stock delivered on time they would not store any more than they had to and were led into the just in time delivery arrangement. The farmer was holding the product at his cost untill they needed it unless they found a cheap excuse to not take delivery.Maybe this would needs to reallize that just in time should dissapear and start building some storage. They will pay up if they get hungrey enough. I'll be so glad when the wheat Board is gone. The grain commission can go a long with them too.

[charliep]

ProFarmer

Both models exist in Alberta. Canada Malt has invested in storage facilities. Raher pulls directly from farmer storage more so. Each has a different set of deductions that reflect their storage costs and risk.

[Burbert]

Same situation that has occurred in Europe, ie Scotland. Malt prices have been so low for so long, producers have refused to grow the stuff recently, forcing maltey's to go to farmers and offer DECENT prices. Probably won't work here in Canada though, we all enjoy screwing each other over, so much. I ain't going to grow malt until things get sorted out. In fact barley is off the table on our farm, for the first time due to uncertainty!

[gregpet]

I agree Burburt, wheat has been minimized on our operation because of poor prices unlike the (open market) feed barley prices where I have certainty and opportunities in pricing.

[kryger]

That's good Burbert. You know your Wheat is going to be underpriced by the CWB, and you don't have to pay levy to ABC for your high priced feed Barley