Just a note to highlight the current rally in all US wheat markets. If you have CWB basis contracts that you haven't priced out yet (particularly if you are using the Dec. futures contract), you should be watching the current rally carefully with the idea of pricing out. A couple of other notes.
1) Use the contracts to price out high quality/protien spring wheat. DON'T USE for CPS wheat. The spread in initial payment between 1CWRS 13.5 and 1CPSR is $48.70/t. The spread on the PRO forecasts is $35/t. CPSR wheat will continue to have more value in the domestic market anyway so sell non board.
2) If I signed a contract under the Dec., I wouldn't roll it to other months even if I were optimistic about prices. Under the CWB contracts, you are forced to eat the carry (difference in price) between futures months plus the cost of rolling the contract. An interesting idea if you want to stay unpriced is to lock in the CWB basis to get the fixed price and replace the amount sold with a futures position in a farther out month. You are still at risk on the loonie.
Any other thoughts/comments about the CWB contracts.
1) Use the contracts to price out high quality/protien spring wheat. DON'T USE for CPS wheat. The spread in initial payment between 1CWRS 13.5 and 1CPSR is $48.70/t. The spread on the PRO forecasts is $35/t. CPSR wheat will continue to have more value in the domestic market anyway so sell non board.
2) If I signed a contract under the Dec., I wouldn't roll it to other months even if I were optimistic about prices. Under the CWB contracts, you are forced to eat the carry (difference in price) between futures months plus the cost of rolling the contract. An interesting idea if you want to stay unpriced is to lock in the CWB basis to get the fixed price and replace the amount sold with a futures position in a farther out month. You are still at risk on the loonie.
Any other thoughts/comments about the CWB contracts.
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