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    New Crop Prices

    What have people been hearing on new crop feed wheat/barley prices and basis? This is particularly interesting for basis on the central Saskatchewan delivery point feed wheat contract? How about pulse crops? Lentils still in the 14 to 15 cent/lb area? 9 mm Kabulis around 25 to 26 cents/lb? 7 mm Kabulis Chico/B90 and the like 16 to 17 cents? Desi around 13 cents? Peas??? Not worth printing?

    #2
    From SW MB. I have seen new crop feed wheat prices of $110 per MT with the basis around $15. one large cement was only offering $2.05 and it was not a typing mistake!

    Comment


      #3
      Thanks for your reply. I am still struggling to get Alberta based new crop domestic feed wheat prices. The only price I have heard is $5 to $6/t under the Oct./Dec. loaded rail car. By the time the elevator company gets an elevation, margin and a bit of freight adjustment (this is Frazer Vally BC business), the actual basis is closer to the $15 you mention in Manitoba (just under $3/bu delivered elevator).

      The only other offer I have heard is from a feed mill. They were are offering $3/t over WCE feed wheat for higher quality feed wheat (a high quality 3CWRS) with one caveat - delivery at buyers options. That is, the buyer can call the wheat at any time with 2 to 3 days notice. A part of the sellers commitment in the contract is to agree to the tight shipping scedule.

      Has anyone been contracting with API in Red Deer? What are they offering? Other offers?

      Comment


        #4
        Charlie,

        I see this weekend that the CWB PPO on 13.5 CWRS is over $220/t, which should make the wheat price the highest in the last few years!

        THis should put Crystal CPS in Alberta well over $3.60/bu plus storage, a good sign to see.

        It will be interesting to see if this is positive or negative to the non-board feed wheat contract.

        What do you think Charlie, should there be a connection between the CWB PPO and the 2001 fall Winnipeg Feed Wheat Contact?

        Comment


          #5
          Charlie,

          I am finding the non-board feed wheat prices hard to stomach!

          The PPO being at over $220, with the recent PRO leaves CPS at $176.

          With a basis of $40.00/t (multi carspot terminal $4/t premium subtracted) this puts us at $136/t or $3.70/bu.

          Why would anyone sell feed wheat to the non-board feed wheat market at $3.00/bu?

          Why hasn't the non-board market rallied to a closer relation to the CWB CPS price?

          Why are our markets not working, the spread shouldn't be 70 cents a bushel should it Charlie?

          Comment


            #6
            Just some thoughts Tom4CWB.

            1) A price is what a willing buyer and seller agree to. In your analysis (I can't disagree) you are better to sell CPS wheat to the CWB. A couple of points to highlight is that you may not get 1 CPS but rather 2 or Canada Feed so the differential would come in.

            2) Your $3/bu non board price is likely low with some negotiation. Oct and December WCE feed wheat futures were $126.90 and $129.90/t (Apr. 13). A $10/t basis (realistic for an elevator) should give you a look at around $3.25/bu. Direct feed mill business should be even higher.

            3) You are selling energy and protein in the case of feed wheat and its fit on a cost basis in competition with other feed ingrediants. Your biggest competitor for feed wheat is the $2.25 to $2.50/bu new crop feed barley in central Alberta. Poultry rations, sow and starter rations are about the only feeds that require high energy (feed wheat). Feed peas at the prices you mention would start to fit into rations more as an energy source. Finally, at the price you indicate, I think you would be surprised how much/how far north you would drag US corn.

            3) The final areas are cash flow and bin space. The CWB programs make no guarantees about when you can move product. A portion of non board pricing and delivery commitment gives me the confidence I can move product to satisfy both these needs. If we get into a year of large feed wheat supplies (early frost/wet fall), I would have pre-arranged a market for some of this product.

            I like the idea of a blended marketing plan for CPS wheats with some forward contracted non board (with better prices in mind and going direct to feed mills), some priced under the CWB PPO program and the last bit held unpriced to play the market a bit during the coming winter. The big thing is to have a market plan. Others thoughts.

            Comment


              #7
              Charlie,

              I would say the comparison between CPS and feed wheat is on the same footing.

              1. 2CPS is only about $2/t less, which is nowhere near the 25/t we are talking about.

              2. With the Crystal PPO program, storage and interest is paid for which more than offsets possible early delivery.

              3. Many times, just about always by the way, I have had to store the harvest delivery feed wheat before making the delivery to the elevator.

              4. Our farm has never had CPS grade feed wheat ever. 2CPS is not pretty wheat! Most farms can make this grade blind folded with their hands tied behind their backs! It is extremely unlikely that anyone trying to make a 2CPS could not, particularily if they straight cut their wheat.

              Now for the barley comparison.

              You are right on this one, and the CWB alone is responsible for the poor fall barley price!

              If the CWB were to be stripped of feed barley marketing tomorrow, you and I both know feed barley prices would instantly rise.

              The 165/t in Vancouver for the past 4 months has not been reflected back to Alberta.

              If domestic barley feeders do not have to bid against the international market, they will not, and they get the benefit of cheap barley.

              Feed Wheat competes with feed barley, so when one is out of kilter, then they both are!

              When Feed Wheat is not competitive, then Feed Peas don't have to be either!

              The Chain reaction goes on and on.

              I think you make far too much of the corn threat to our market!

              When was the last time Alberta feeders fed US corn Charlie?

              Are they set up to do this efficiently, at low cost?

              Will their mills handle the Corn?

              Will the packers even want the cattle after they are fed GMO corn?

              No Charlie, the CWB effect is the single most devestating problem in the grain economy today!

              Every time the CWB turns down a sale at 40 cents a bushel above the domestic feed market price, we all pay, big time!

              I really hope the Alberta Government can do something about this.

              Now, what do I do if the Alberta government is going for marketing choice in the next crop year?

              Do I defer marketing decisions hopeing that we might get arbitage with the international market?

              Comment


                #8
                Tom4CWB - You are right about corn not fitting into finishing cattle rations. My ideas though are that most livestock and feed mills run ration formulators based on cost. Higher feed wheat prices brings in other ingredients as a replacement. Jim Gowan - a feed advisor to many of the larger hog operations - posts feed rations based on current feed prices at the Alberta Pulse Growers web page.(www.pulse.ab.ca). I use this to monitor feed ingredient price relationships.

                Comment


                  #9
                  Charlie,

                  I see we are up another $3/t on CWB PPO Wheat again today.

                  Why is Winnepeg so slow to react when Chicago wheat rises?

                  Obviously as I own Winnepeg Calls, this bugs me!

                  Why does the CWB have an added feed wheat discount that is variable, on top of the already lowest prices anywhere on the planet?

                  I thought the CWB was here to get premium prices back to grain producers, not do give aways!

                  What gives Charlie?

                  Comment


                    #10
                    Tom4cwb

                    Just to highlight again WCE feed contract is a feed grain one with western barley futures and CBT probably having more of a impact on it than US wheat futures. Trade is also very thin in this market - particularly with the new contract delivery location change. Feed mills - the main users - are mostly cash buyers. BC is doing some fall business but limited volumes. Eastern Canada is dying as a market. Most farm managers would agree that current WCE feed wheat futures are too low - this has yet to be seen.

                    On the extra CWB feed wheat, my guess is that the CWB will not apply the full discount to feed initials as indicated by the PROs (CWB feed wheat initial payment would be close to zero). Going this route allows a higher initial payment and a fair PPO.

                    Comment


                      #11
                      Charlie,

                      The problem becomes that our feed wheat grade is not at all quality based.

                      Canada Feed Wheat can be US #1 Dark Northern 16 percent protein wheat.

                      We must develop a quality based grading system, for it to be fair to farmers!

                      How soon do you think this will happen Charlie?

                      Is it fair that a grain company can buy Canada feed wheat and make $2.00/bu on it just because our grading system is in a big mess?

                      Comment


                        #12
                        I will defer your question about how quickly/whether we should move away from the current CGC grading system to one based more on quality specifications. You raise good points as have others. A point is there will be winners and loosers in this process. I am not so sure you will be adding value to your crop rather than just giving another reason to discount wheat . Just an opinion.

                        With regards to feed wheat, I have to highlight the reason for downgrading make a big difference in whether it is feed or a lower quality wheat with milling properties. Obviously with sprout damage, falling numbers will be down and therefore, poor milling qualities. If the downgrading factor is frost, then it can still have reasonable falling numbers/milling quality. The issues will be shrivelling/lighter bushels weights. Flour yields will be down and a harder kernel will make milling a lot more difficult (if my memory is correct, somewhat similar to grinding small rocks). Putting it another way, even the best quality feed wheat is not a Cadilac product . The issue is that it remains a lower quality wheat - there is a reasonable relationship (not perfect) between our current grading system and quality.

                        The US system handles the above by blending wheats to achieve a specification. I will leave to discussion as to which system is better.

                        Comment


                          #13
                          Charlie,

                          I do believe you missed the point.

                          If I grow a US variety, of perfect quality, it is good milling wheat for everyone in the real world except the CWB.

                          But the CWB still grades it Canada Feed, and charges me at least an extortionary buy-back price. Is this fair?

                          Did the CWB in fact create any value for me, when they don't even market this wheat, and do nothing within the Canadian system to buy or fairly accomodate this wheat.

                          The Western Grain Marketing Panel said let unregistered varieties go.

                          The CWB will not.

                          The CWB will have this one on their grave marker if they do not deal with it fairly!

                          Comment


                            #14
                            A question back to you Tom4CWB. Are we talking about changes that would allow you to move grain south under a more flexible system or are you talking about fundamental changes to the grading system that will impact all deliveries/sales? Under the assumption of the latter, what would the grading system look like? Would we move to a US system? Can we compete with what I consider a Walmart system in the US - particularly in a world where US subsidies are based on price and encourage maximum yield? Do we have a competitive advantage we can exploit in our varieties/current system? A fundamental aspect is who is accountable for moving specific product with identifiable quality characturistics from the elevator to port (Braveheart raised this question in another link) - CWB or grain companies?

                            Comment

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