New CWB Feed Wheat Program

[Steve_Winkler]

OOOPS. I just followe Charlie's link.

Found pricing. Holy Discount Batman.

[charliep]

It is one complicated program if you want to move beyond just the price/money you deposit in the bank (or at least within a couple of weeks of delivery). Perhaps a time you just look at the value and make a decision whether worthwhile. Don't wory about where the CWB came up with the number.

Not sure the rules around delivery and pricing - can you lock in a price on a GDC that will be delivered over a two month window - i.e lock in a price at the signing of a GDC.

[JDGreen]

I must be the dumbest farmer around. I have been trying to make sense of this since last night and still no return call from my FBR. We are back to the same old crap, run around BS. Post a daily price with 100% acceptance and be done with it.

[charliep]

For what it is worth, feed wheat to South Korea business (early 2011 shipping period) could be transacted today at about $260 to $270 ish/tonne. Knock off $15 ish for handling Prince Rupert/Vancouver and you have a price close to $250 in store.

[Burbert]

WOWSERS WHAT A PROGRAM! This is everything that anyone could ask for, innovative, progressive, money making, and best of all, its legal, not a scheme. Comedian Marketeers and desenters, let the WHINNING, AND SNIVELING BEGIN, one, two, three, all together now, A COLLECTIVE SNIVEL, THEN WHIN, NOT GOOD ENOUGH, NOT GOOD ENOUGH!!!!!!!!!!!!! Response from Albertie Governor, the wheat board must be insane, yeah manically insane!!!!! After all, hindsight is perfect, the program could have been better than this.

[charliep]

Actually a lot better that what existed before. Just a question why not earlier.

Would ask you to explain as the CWB spokesperson how the program operates and the nuances of the fine print in the contract. But won't put you through that pain. You were obviously happy with the 70 cent/bu initial (now adjusted to just to $2/bu). Perhaps just jealous because I don't know too many farmers that can afford to do this cash flow wise. You are a lucky - either a millionare or other sources of income/a paid off farm.

[charliep]

Burbert

Help me understand something. Why didn't the CWB just go with a daily cash price connected to a guaranteed delivery contract? It would be posted on the elevator/inland terminal backwall with the open market crops?

[jdepape]

See if I can figure this out -

PRO is 232

100% EPO gives you guaranteed price of 215.90 plus any final payment above 232

It's like selling cash at 215.90 and buying a call option with a 232 strike (at the money).

200% EPO gives you guaranteed price of 237.44 plus any final payment above 464

It's like selling cash at 237.44 and buying a deep out of the money call option with a 464 strike

If the CWB is willing to guarantee a price (200% EPO) that is $5 over the PRO, I'm gonna guess that they believe quite strongly that the final pool return will be higher than the current PRO, perhaps substantially higher.

Unless you need to go with the higher guaranteed prices for cash flow, the lower EPOs (80%) seems like the better deal.

Am I missing something?

[bucket]

Doesn't this just work out to be the same as off-board feed wheat price and what are they doing for high quality grain????

[btjadenlepp]

bucket

1. i'm not going to say that they're
doing nothing on higher quality wheat,
but this is a completely different
program from 1CWRS and protein.

2. depends a lot where you are if these
new prices are higher or lower than the
domestic market.

www.farmlinksolutions.ca

[bucket]

But why not just leave the feed market to the grain companies,feedlot or ethanol market?

Do farmers have to pay the cwb for something that the infrastructure is in place for already?

Not to mention the fact it took the marketing geniuses at the cwb months to figure out it was a shitty crop.

[mcfarms]

Because this year unlike others currently the best prices for the feed wheat is offshore due to the problems in the Black Sea wheat. However this may be changing a bit now with Aus. having harvest issues as well, sorry about Aus misery loves company, Their prices can be found on the AWB site and give a decent indication of what feed is worth at port position there, remember they have a freight advantage to Asia so sales may switch to there.
That said this new program is a bit of a tricky one but is at least an option we didn't have a week ago. I was so close to taking a fixed price at 5.50 a few weeks back but didn't as the at delivery deductions with no movement scared the hell out of me as of yesterday I can get 5.37 out of this locked in with later delivery( unless I don't understand the program)|Looking at things this morning unless the deductions move and things are up real strong overnight and unless it changes during day trading we could be right back there. I can live with 5.50 feed as in the spring wasn't 3.50 1cwrs being talked about?
This new program may not be perfect tool for all but sometimes you don't have the right tool in the field and the crescent wrench has to do the job.

As far as which epo to take IMO at present it's like this the board would not have been presold very much on feed before this fall as they would have been working off normal grade patterns so the poo should be fairly level on projections to this point.