CWB Flexpro Pricing Starts Today

[charliep]

See the CWB is allowing pricing (or perhaps better called up front payments) starting today. Not sure why as the fixed price contract without the adjustment factor and the flexpro are the same price. May offer some opportunity to price old crop (provided you haven't contracted and delivered prior to July 31 - has to be new contracts for 2010/11). FPC Friday (new crop) was about $250/tonne or $200/tonne ($5.40 ish/bu) with a $50 CWB deduction. That compares to $184/tonne old crop PRO and a new crop PRO of $168/tonne (elevator $50ish deductions).

Begin quote.
2010-11 FlexPro pricing begins
Pricing for 2010-11 FlexPro begins Monday, July 19, 2010 at 3 p.m. CT (Winnipeg time), two weeks before the previously published start date. Producers can price their tonnage committed to the program every business day from 3 p.m. to 9 p.m. CT, until July 29, 2011. Producers can still commit tonnage to 2010-11 FlexPro until Friday, July 30, 2010.
End quote.

The PRO will be very interesting on Thursday. Won't see as I will be on a lake paddling but leave to everyone here to interpret.

[charliep]

For what it is worth, the old crop (2009/10) flexpro was $246/tonne Friday or $196 elevator with $50 deductions. Only applicable to someone who still hasn't cashed on an old crop flexpro.

The historical charts highlight the relationship between flexpro and the PRO.

<a href="http://www.cwb.ca/public/en/farmers/producer/historical/pdf/2009-10/2009-10flexprocharts.pdf">historical 2009/10 flexpro values</a>

[charliep]

Someone will have to explain to me why the flexpro is a good program. It would seem the CWB has taken $30 to $40 of flexpro users money to manage risk. Thats a dollar a bushel. Help me. Maybe I don't understand.

[charliep]

No one comments but I keep seeing the "Grain Deliveries are Changing" advertisement blinking at me. Actually changing the system to Guaranteed Delivery contracts when grain coming in can be matched against sales is good thing - don't need inventory sitting in the elevator system without a nearby shipping period/sale. What isn't happening is there is no price signal to accompany this. Why not allow pricing activities against sales that reflect a true value? At the very least, this would reduce the CWB's risk management costs which in the case of flexpro would appear to be about $1/bu of wasted money. The $1/bu would be much better sitting in a farmers pocket.

[charliep]

Perhaps the process to initiate change is having cash rent landlords (know they don't vote - only crop share) get paid at the time CWB final payments are sent out. Payments for land rented in 2010 would be made in December 2011 or January 2012. Could do the same with crop share - initial/adjustment payments go to the actual farmer/landlord paid for crop share with the final payments.

[charliep]

for what it is worth, today's new crop fixed price contract are identical to the flexpro.

<href ="http://www.cwb.ca/db/contracts/ppo/ppo_prices.nsf/fixed_price/fbpc-wheat-2010-mhrs-20100719.html">fpc</a>

<href="http://www.cwb.ca/db/contracts/ppo/ppo_prices.nsf/flexpro/flexpro-wheat-2010-20100719.html">flexpro</a>

[charliep]

oops.

[URL="http://www.cwb.ca/db/contracts/ppo/ppo_prices.nsf/flexpro/flexpro-wheat-2010-20100719.html"]flexpro[/URL]

&lt;a href=&quot;http://www.cwb.ca/db/contracts/ppo/ppo_prices.nsf/fixed_price/fbpc-wheat-2010-mhrs-20100719.html&quot;&gt;fpc&lt;/a&gt;

[Hopperbin]

Charlie I suppose flex pro is a type of guaranteed delivery contract with a delivery point is it not?, on a fixed price contract the farmer must find his delivery point which may be hard to find on a minor wheat class.

[charliep]

No direct tie between flexpro and guaranteed delivery contracts although they can be used together. Flexpro is a pricing (or better locked in payment tool) that can is used the same way as the fixed price contracts. You are right that guaranteed delivery contracts are normally tied to a specific grain company.

Sorry for the rant above but frustrated by the inability of the CWB to be more creative in their pricing programs and a closer tie between customers and farmers.

The CWB has gone to two pooling periods for feed barley. Why not use this for other wheats?

The CWB is using cashplus for malt barley and a domestic pricing program for soft white spring wheat. Why not other wheats?

What is the cost of running the PPO programs? Are there more effective risk management alternatives that would reduce this cost?

I recognize the financial pain of some individuals as a result of weather issues. Some will need cash early to pay bills. The current CWB system adds extra burdens onto these individuals by weighting the entire PPO risk management cost on their shoulders when it really should be a CWB operations cost shared by everyone with the responsibility to keep as low as possible.

[charliep]

I might add on my frustration of the inability to launch alternative wheats. Prairie spring white as a noodle wheat sold in competition with Australian Standard White. Extra strong as a high gluten wheat for frozen dough. CW white spring wheat for whiter flour in whole wheat breads. Can anyone name any successes in these wheats?

If western Canada is going to treat these wheats as specialty wheats for designated customers, then there has to be a lot better system that today for communicating market signals and providing logistics from the farm gate to the final customer. The CWB is a commodity seller that can't seem to break out of the mold into specialty markets. Pricing/payment tools highlight this problem in spades. Maybe that is a good sign they should let spcialty wheats go.

[TOM4CWB]

Charlie,

I note millions for tonnes of Hard white milling wheat is being provided by US industry. Japan is really starting to buy white wheat. Sadly the CWB sees this as an intrusion into the high quality CWRS market they count on to prop up the monopoly.

South Korea, and many south Pacific countries buy US hard white. Has the CWB geared up to give 'designated area' wheat growers the same opportunities to diversify into specialty wheat production?

It takes years to gear up the seed stocks... and when the CWB drops specialty wheat... it takes even more time to clean the land-base to start with some other class of wheat.

Jumping in and out of producing these classes... has huge costs to the grain industry. I see no indication that the CWB accounts for these costs in decisions much less share in the cost!