WTF? Feds sell Canadian Wheat Board to Saudis??!?!

[Dythbringer]

So does this board actually have much influence/value? Or did Harper throw them something shiny for future consideration and favors?

From my understanding, a lot of farmers were still selling to the CWB so I would have to say it did have a lot of influence (just not as much as it had prior to 2012).

[trimmer21]

So does this board actually have much influence/value? Or did Harper throw them something shiny for future consideration and favors?

The Wheat Board was continually under fire from the WTO which facillitated the break-up of the monopoly,so,I'm not sure what's happening with this. In that regard,you may be right. I can't see it being over oil because we have lot's of our own along with Natural Gas.

[Hunter John]

Control of a board that any level of authority over any Canadian industry should NEVER be sold off to a foreign corporation or nation. Ever.

Why not ? What about Canada post. It has been bleeding money for years and being kept afloat with taxpayer money. I dont know the financial status of the wheat board but if it makes sense to sell it and Canada and most importantly the farmers benefit from it I dont see the problem.

[JBen]

Again I know very little about the industry or the particular market. I don't see giving foreign interest a controlling stake as necessarily a bad thing here ( again don't know near enough). Most "Cdn" companies are foreign owned these days. It's been a few years but I think most protected industries have been done away with except possibly telecoms (still 10% ceiling for any single foreign owner).

Wheat, I assume like most commodities prices in the "fair market" ( and you'd have understand how market efficiency theory works) as well such things as intrinsic, cost of carry, and more, is likely largely affected by the futures contracts available. Not unlike Oil and so much more.

In theory (not sure what a "wheat lot is" maybe 100,000 tones") 1 futures contract is exactly = to 100,000 tonnes. Basically a buyer/seller wants to be indifferent whether they are farmers and have the physical wheat or a buyer of 1 contract they are exactly the same.

In theory nothing stops a farmer from selling 1 Sept wheat futures contract today ( at todays prices +/- factors like cost of carry which accounts for interest rates and more). Doing so locks in his price today. So he knows today exactly what that 100k tones of wheat is going to fetch come Sept. In essence is doesn't matter what the wheat board might set. Maybe they say thats

$100k per 100,000 tons
The farmer locked in today at 110k. If the wheat is worth more he "loses" upside potential…If in Sept its worth less, he's up money as theres no downside risk to him. Its a basic hedging/risk management tool. In a nutshell in Sept he delivers the physical wheat to the commodities exchange, and receives what he received for the futures "today". If delivery of the wheat is impossible, he covers his "short" (sale) position a couple days before.

If the Sept contract is trading at 125. He loses $15 on the futures trades, but gains it back when he sells the wheat at 125. Or if its at $80. He's up $30 on the futures trades.
Sell 1 contract at 110 today
Buy 1 contract at 80 on Sept 15th
Up 30
Sell his wheat on Sept 18th for 80.

[JBen]

One other thought on "why" Harper might be doing it or part of his reasoning. Dunno, just a stab.

A couple years ago if memory serves me right, we (Cda) got a bit icy with the Saudis, and there was a falling out. If I recall correctly it had something to do air travel, and number of flights or "something".. Since then things have been a bit icy on trade matters. This might be (just a wild stab) Harpers way of giving a little here, to gain there. Or part of it, dunno.

[DaleK]

The wheat board is a nonissue. They no longer have any real control over wheat anyway so were basically reduced to being just one grain buyer among many. Selling it takes some pressure off in world trade issues and does absolutely nothing to harm farmers.