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November 3, 2008

 

CWB single desk seller status escalates for now

 
 

The reasons behind the Canadian Wheat Board being able to sustain its monopoly powers over Western wheat and barley for a while longer would have likely to be the global financial crisis, another minority government, over supply and declining grain prices.

 

In the national election held on Tuesday, October 14th 2008, Canada's Conservative government failed for the third time to win a majority and therefore still needs the support of at least one party to pass legislation.

 

To date, all three opposition parties have expressed their support for the Canadian Wheat Board and have opposed the Conservative plan. Aside from the government being too caught up trying to navigate the global financial crisis to make dismembering the CWB a priority, the popularity of the Canadian Wheat Board and its single desk seller status tends to escalate in times of global economic slowdowns.

 

However, the Canadian Wheat Board director elections at the end of November have the potential of seeing the number of pro-monopoly directors on the board shift from a slim majority to a minority.

 

If the shift were to happen, the board would likely take the Canadian Wheat Board in a more open-market direction.  Industry analysts speculate that this is less likely to occur now than if elections had taken place in the spring when grains prices peaked.

 

With the world economy slowing and big crop harvests facing difficult marketing problems due to a credit crisis, a majority of producers may feel more secure selling through the CWB, thereby limiting the likelihood of pro-free market directors being elected in the November director elections.  

 

For the full USDA report, please click here

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