Dear Editor:
Do farmers really believe a market exists for grain sales?
Many farmers are complaining about grain prices being offered this winter especially for wheat. It is hard to find a port price for wheat but data from Agri Canada and Food states the average price this year is north of $8.60 per bushel at Vancouver and even higher on the world market, yet farmers are only receiving a little more than $6.00 per bushel at the farm gate.
Wanna be market guru’s point to the futures prices to indicate what farm gate prices should be. This is nonsense! Future prices do not reflect actual grain sale prices!
They only reflect what speculators are willing to hedge or insure the small amount of grain not sold directly to end-use customers by the four or five big grain companies. . It does not reflect the actual sale price of the grain and it certainly does not predict the future either!!
The zealots who say the futures price serves as a price discovery mechanism are misinformed. The recent trading violations against Archer Daniels Midland, whereby ADM, “maintained ownership and control of the accounts on both sides of the transaction” show a different story. The process in which a trader buys and sells future contracts to himself or an entity he controls is banned under futures law. Yet the fine was only $25,000 for a company which has a capitalization of about $26 billion. This makes a joke of price discovery and the policing of these markets!!
This just shows the transparency that some farmers loudly clamoured for, years ago is just not possible the way the grain market works today.
Kyle Korneychuk
Pelly, Sask.
