Alberta Wheat Commission’s data service provides farmers with bid prices for a particular area
A new grain market information service is focusing on regional price averages on the Prairies rather than prices at port.
John De Pape, a grain marketing consultant working with the Alberta Wheat Commission to develop a crop data and price reporting website, said information on regional prices is useful because it provides a “character” of the market and allows farmers to compare their area to other parts of the Prairies.
For instance, De Pape recently collected information on canola basis levels in different parts of Western Canada. In the second week of April, the average canola basis in Manitoba was -$14.32 per tonne but nearly -$49.91 per tonne in northeastern Saskatchewan.
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“What caught my eye was, ‘excuse me, $49 (per tonne) under and you (Manitoba) are at $14 under.’ That’s a $35 spread,” De Pape told a Keystone Agricultural Producers meeting in Portage la Prairie in mid-April.
“I think that’s pretty good information…. If I’m sitting up there in northeastern Saskatchewan and I see there is a $40 premium to haul down to somewhere in Manitoba, I’m on the phone talking to … different elevators (in Manitoba)…. I feel badly for the guys up in northeast Saskatchewan because they have few options and that’s why the price is so bad. But they also don’t have the information.”
The federal government contributed nearly $750,000 in late January to help the Alberta Wheat Commission build a grain market information service. De Pape, who runs FarmCo, a grain marketing consulting firm, is leading the effort to establish a Price & Data Quotes website at www.pdqinfo.ca.
The site now posts prices for red spring wheat, Canada Prairie Spring wheat, durum and canola in the Peace region, northern Alberta, southern Alberta, northwestern Saskatchewan, southwestern Saskatchewan, northeastern Saskatchewan, southeastern Saskatchewan and Manitoba.
The posted prices are the average for the particular region, based on grain companies’ reporting of cash bids.
De Pape said the initiative is emphasizing regional averages rather than port prices because the relationship between a port price and a cash bid in central Saskatchewan, for example, can be confusing and not particularly helpful.
“I have some serious concerns about reporting port prices…. To ask for them (grain firms) to report what they’re selling for, I don’t think is going to get you (the farmer) what you want,” he said.
“If someone sold grain today, f.o.b. Vancouver on April 16, it’s probably for June, July or August shipment…. How do you draw a straight line to that (price) and today’s elevator price?… It’s not impossible, but it’s difficult.”
De Pape said a company that buys grain in Saskatchewan may maintain ownership of the grain beyond the Port of Vancouver.
“There’s not a lot of business that goes on in Vancouver,” he said.
“Viterra will buy from inland country (in Western Canada) and sell it (elsewhere)…. They’re not transferring ownership in Vancouver, it’s just going through there. You might as well pick Golden, B.C. It’s just a point that it goes through.”
A few producers have told De Pape that regional price averages aren’t helpful because they can phone a few elevators to get a sense of grain bids in their area.
De Pape said knowing the prices in a small area doesn’t provide a perspective on the broader cash grain market. As well, producers need daily information to understand trends and market direction.
“I’ve had guys tell me this: I have to phone three (companies) every day just to keep a handle on the market,” he said.
“I know some grain buyers are fed up with all the phone calls.”
The website also plans to provide information on wheat protein premiums and grade discounts.
De Pape said a farmer who has No. 2 wheat with 12 percent protein needs to know the price for No. 2 wheat with 12 percent protein.
“Why shouldn’t you know that? Why shouldn’t you know what the protein spreads are?”
Not all grain companies are participating in the project. De Pape said several companies do not post prices on their website because they prefer to share prices directly with their customers.
De Pape didn’t say what percentage of grain firms are on board, but he said the prices posted right now on pdqinfo.ca are useful.
“If you’re asking if they’re relevant, I think they are,” he said, responding to a question following his speech in Portage la Prairie.
“As relevant as the prices that they (grain companies) have on their websites.”
De Pape is collaborating with the Western Grain Elevators Association to increase the rate of participation and incorporate as many bids as possible into the price averages.
“They have ideas and we have ideas and we’re trying to find common ground,” De Pape said.
“They haven’t said no…. They just want to make sure it’s done right.”
WGEA executive director Wade Sobkowich said talks are progressing to provide the necessary data for average regional prices.
“We are working co-operatively with him to try and sort through this and get him information that meets the … (agriculture) minister’s objectives.”
De Pape said they want a fully functional website by Aug. 1, in time for the new crop year.
KAP president Dan Mazier asked if the federal government will require grain companies to report prices and other relevant information.
De Pape said he prefers to collaborate with the grain industry, but regulation remains an option.
“It’s a stick that the minister has, but he’s reluctant to use it,” De Pape said. “But in all honesty, if we fail in getting voluntary compliance, I’ll have to make that recommendation to the minister.”
robert.arnason@producer.com
