Canada: CWB confident of large share of wheat sales under the open market

The CWB is confident it will garner a larger share of wheat sales under the open market than its counterpart in Australia, The Western Producer reported on April, 10.

CWB president Ian White said the AWB, the former Australian Wheat Board, has typically handled 20 to 30 percent of Australia’s wheat crop since it lost its single desk powers in 2008. AWB is now owned by Cargill.


“We expect probably that we would get a larger market share than that,” he said.


“We think in Canada the CWB pool will be much better supported than the AWB pool.”


Being the only pooling option in the newly created open market will work in its favour, he added.


The company recently completed 22 meetings with prairie farmers, at which many growers expressed uncertainty over how wheat marketing will work after Aug. 1.


“We get a sense that farmers are very interested in the CWB contracts, particularly the CWB pooling contracts, because this will take away a lot of the uncertainty,” White said. 


“They’re products that they generally know.”


Wade Sobkowich, executive director of the Western Grain Elevator Association, hopes the CWB markets more than one-quarter of the 2012 wheat crop.


“That (would be) good news. It would show that the wheat board can function in an open market,” he said.


“These tonnes will still be moved through the grain handling facilities, which is at the end of the day what we’re after. The name of the game for us is turnover.”


Sobkowich said the board’s market share could feasibly exceed 25 percent if farmers view its programs in a positive light.


Last week, the CWB officially unveiled its pooling and cash contracts. It is offering growers a harvest and early delivery pool, a deferred delivery contract, a futures-first contract, a basis-first contract and a malting barley production contract.


“Our pools will ensure that farmers are never forced to settle for the bottom of the market or chase an elusive market high,” White told reporters during a conference call.


He said the pools allow producers to participate in market rallies that take place after their contracts are signed. 


The cash contracts offer features that can’t be found elsewhere, he added: multiple delivery options, more wheat reference grades and the backing of the federal government.


Chief operating officer Ward Weisensel said another unique contract feature is the ability to sign pool and futures-first contracts and then choose a delivery point at a later date.


“Some farmers may even want to deliver some grain to one company and some to another,” he said.


“This will hopefully give them some negotiating power and flexibility.”


Prices for the cash programs are on the CWB’s website and will change throughout the day as market values fluctuate.


The CWB also intends on providing growers with a product similar to the existing Pool Return Outlooks.


The company has negotiated hand-ling agreements with Cargill and South West Terminal near Gull Lake, Sask. Discussions are ongoing with other grain companies operating in Western Canada.


“We do expect to have that ability for (growers) to deliver everywhere,” White said.


“There is nothing that I know at this point in time that would give me any contrary view.”


The CWB is content to use the handling assets of competing grain companies rather than buying its own infrastructure, but it may venture beyond its traditional crop mix in 2012-13.


“You could anticipate that we’ll be looking at whether we should be involved in canola and whether we should be involved in peas,” said White.

13 April, 2012