The Wide Canola basis - On Whose Side is Bruce
Dalgarno?
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Defining
the Canola basis and how it is set
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Two
tools farmers had to affect the basis were confiscated
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MCGA
(including Dalgarno) support WCE, ie removing farming deliveries
against the futures
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Dalgarno
supporting the status quo of a wide $62 basis
Defining
the Canola basis and how it is set
By definition, the Canola basis is the
difference between the futures price and the elevator pit prices.
Nothing more complicated than that!
The basis levels are effected, not only by the
"supply and demand" situation between farmers and the
elevator companies, but also whether farmers can by-pass
the elevators and arbitrage high basis levels, by selling directly
against the futures.
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Two
tools farmers had to affect the basis were confiscated
During my farming life-time, farmers lost two
tools by which they could affect basis levels. At the urgings
of the elevator companies and the Wheat and Barley grower
associations, (members like Bruce Dalgarno), the "supply and
demand" equation was changed to the disadvantage of farmers,
when farmers as a group could no longer control farm supplies
through a quota system. Suddenly, the entire remaining whole
years supply was pressured the basis from harvest on and basis
levels had to widen in order to dampen the available supply.
Under the guise of ensuring the integrity of the
futures market from "defaults" when the Winnipeg Commodity
Exchange had never experienced any defaults in deliveries, the
Winnipeg Commodity Exchange changed the rules when the Warehouse
Receipts were replaced by Warrants. What the promoters of this
change would hide from the farming public was that in effect this
change confiscated the farmer's right of delivery against the
futures.
Now, whether farmers have a bid-busting crop or a
real disaster with little to sell, all the companies need to do is
collectively set the demand for less than what farmers want to sell
and immediately, regardless of the futures price, farmers bid up a
wider basis to get their truck on the driveway...
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MCGA
(including Dalgarno) support WCE, ie removing farming deliveries
against the futures
In the "Assessment of the George Morris
Centre... Report to the Winnipeg Commodity Exchange September
1995" it is reported in black and white that "The
canola grower associations have communicated to the WCE and the
Canadian Grain Commission that only the FOB warrants and uncleaned
canola recommendations be implemented..."
In effect, by supporting the WCE change from
Warehouse receipts to Warrants, the grower associations like and
including MCGA helped the WCE confiscate the tool farmers had to
arbitrage wide basis and sell directly against the futures.
Dalgarno's 2007 election
biography crows about his chairing the prairie wide CCGA
association. Being on both the MCGA board and CCGA board gave
him two votes. When the WCE confiscated farmer's right to make
deliveries against the futures, Dalgarno was an MCGA director.
Was he then a director of CCGA as well? Or on the board of the
Canola Council of Canada, which with certainty is industry biased
and industry friendly.
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Dalgarno
supporting the status quo of a wide $62 basis
From Eduard's letter printed in the
FIW
Given all the above, exactly whom is
Canola director Bruce Dalgarno representing when in December 2003
with a $62 unpopular basis, he and Cargill are quoted saying
"it would correct itself"? Later, at the Canola AGM,
John Boercher much more correctly stated "it's a license to
steal".
For full letter/context please see If
the market is king, who wins, who loses?
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