2015 Bulk Pricing

[GeneralStark]

In the sap buying thread related to Mike Farrell's spreadsheet tools, which does use bulk prices to calculate sap pricing, there has been some discussion related to bulk syrup prices in 2015.

Wiam said:

"Head of production for Maple Grove spoke at our county meeting last night. He said there was basically no surplus syrup in the states and they expect to be paying in the $2.45-$2.50 range depending on exchange rate."

Dr. Tim said:

"This is what I have heard as well. The price paid will basically be the Federation price with the exchange factored in, plus any premiums (organic, large bulk producer, etc.). For areas further away from the packers, prices might be a bit lower (as usual) due to transportation costs. Apparently syrup sales are fairly strong."

Unc23win said:

"That's pretty much goes with what Bruce Bascom said (he said it would be strong, but slightly lower) which would be 2.45-$2.50 in his letter in the new catalog. In my opinion still plenty of room for both parties (buyer and seller) to make money."

And then markcasper said:

"If there is anything more than an average crop, I think anything grade A is going to be down around $2.00 and very likely below. One US dollar is equal to $1.20 for one Canadian and that will no doubt push this price down if that trend continues. A year ago the exchange rate was closer to even, .20 on the dollar is a big deal and a big change from last year."

Any other thoughts?

[DrTimPerkins]

If there is anything more than an average crop, I think anything grade A is going to be down around $2.00 and very likely below. One US dollar is equal to $1.20 for one Canadian and that will no doubt push this price down if that trend continues. A year ago the exchange rate was closer to even, .20 on the dollar is a big deal and a big change from last year.

Syrup supply on the Canadian side has seemingly little to do with the prices. It is the Federation price (somewhere around C$2.90/lb) and the exchange rate that is most important in determining what US producers receive. Basically the packers can get the syrup for a known price (the Federation price x the exchange rate), so that is what they'll pay for local US syrup. They might save a few cents per pound on the transportation of US syrup if they don't need to truck it real far. It isn't worth it for them to buy just a drum or two here and there though....they need a semi-load at minimum to make it worthwhile to get syrup from areas very far out. That's why you find the buyers concentrating in certain areas....to get enough syrup for full truck loads.

The Canadian to U.S. exchange is currently (this morning) C$0.85 to US $1.00. Thus C$2.90 (the base value of good syrup in Quebec) = US$2.46 (the base value of good syrup in the US). Then you need to factor in the premiums and location.

The forecasts I've seen (which are basically a statistical gamble) seem to show the Canadian $ leveling out against the US $ for the first half of 2015, and maybe even strengthening a tiny bit, with the prediction being that it'll be worth about US$0.86 in June. If you are able to predict where the exchange rate is going with any reliability, then you'd be far better off in the futures market than making syrup.

[Schiefe4]

The forecasts I've seen (which are basically a statistical gamble) seem to show the Canadian $ leveling out against the US $ for the first half of 2015, and maybe even strengthening a tiny bit, with the prediction being that it'll be worth about US$0.86 in June. If you are able to predict where the exchange rate is going with any reliability, then you'd be far better off in the futures market than making syrup.

So what you are saying is forecasts show no real change over the next 6 months? Going from 1 CDN = 0.85 USD to a possible increase of 1 CDN = 0.86 USD?

[DrTimPerkins]

So what you are saying is forecasts show no real change over the next 6 months? Going from 1 CDN = 0.85 USD to a possible increase of 1 CDN = 0.86 USD?

That is the forecast, which is good only until it turns out to be right, or turns out to be wrong.

[unc23win]

Any other thoughts?

Yea you forgot the ones where you asked Eric what he used for bulk price and he replied and then you said what bulk prices were. Then it sort of spiraled from there. Sorry we ruined the thread for you.

[GeneralStark]

Yea you forgot the ones where you asked Eric what he used for bulk price and he replied and then you said what bulk prices were. Then it sort of spiraled from there. Sorry we ruined the thread for you.

The thread is not ruined. I just figured this would be a hot topic.

[wdchuck]

I am no big fan of the major packers. They see our product as nothing more than a commodity- They are not in the business of making us rich! They'll put the price at the minimum that will ensure them an adequate supply to meet their sales projections, all factors taken into consideration.. Things are good right now, but they weren't always this way.

[DrTimPerkins]

I am no big fan of the major packers. ...

Not to be glib about it, but it often seems to be a love-hate relationship in both directions. The reality is that the packers need the producers, and the producers (at least the bulk producers) need the packers. Each wants to make money, and each wants to make the most they can. There is only a certain amount of pie to be had, and the argument is always about how it gets sliced up. In reality, the maple industry has to have both packers and producers do well to be healthy. Unfortunately as prices drop (due to the exchange rate) and tighten up, the pie gets smaller and the differences get (seemingly) larger.

[can'twaitforabigrun]

I just started a new thread in the Sugar Inn if anyone wishes to discuss exchange rates or US monetary policy. Or even Obama.

Theron, not sure if Doc even said that the US dollar is weaker. It is indeed stronger, as it costs $0.84 Cdn for $1 USD. https://www.google.ca/finance?q=CADUSD Therefore, at the current Quebec Federation price of $2.90 /lb Canadian , American packers can buy that Quebec syrup for approx. $2.45/lb American. If the Cdn $ was at par or above, it would be cheaper for American packers to buy US syrup for $2.85-$2.90, instead of the Quebec syrup.

Hopefully this helps.

[DrTimPerkins]

Theron, not sure if Doc even said that the US dollar is weaker. It is indeed stronger,

Correct on both. I said the US dollar was stronger in comparison to the Canadian dollar.