trying to understand CWB fixed price!!!

[mcfarms]

Again delivery date is the kicker, note the board has appplied for another adjustment so that'll widen lower grades more. Likely what 6 weeks from now? 8 weeks with Christmas thrown in?

Really hate trying to market wheat under this system really really do. No question we get our upsides limited and the downside left open in this scenario we are in right now.

[charliep]

Perhaps to help add confusion, your adjustment payment is the one on the day you signed your fpc/bpc. Even more confusions if it is feed wheat, you have to include the feed wheat adjustment. The feed wheat discount has been varying between $12 and $20/tonne depending on the date of delivery.

To the original, would be curious if any of the single supporters can explain all the hoops that farmers are required to go through to simply lock in a price and get paid in a reasonable amount of time.

[cityguy]

At the risk of continuing with the ice cream headache, and probably more for my benefit than everyone else's, this is the difference in delivering against an FPC on Dec 1 and Dec 2 when the initials changed - so bear with me. Dec 1 the 1-13.5 initial is 134.20 and the 2-13.5 is 126.20. On Dec 1 the FPC was 327.43. So if you delivered against that FPC on Dec 1 you'd get a cheque from the CWB against your FPC at 327.43-134.20= 193.23. At the same time you'd get from the elevator an initial for 2-13.5 of 126.20 for a total of 319.43 less deductions back to your delivery point. If however you delivered the next day when the 1-13.5 inital changed to 202.60 and the 2-13.5 initial went to 183.30, then you'd get a cheque from the CWB for 327.43-202.60=124.83 plus a 2-13.5 initial for 183.30 for a total of $308.13.

So you're out $11.30 simply becuase of the red tape involved in the timing of the initial change.

I can understand adjustment factors kicking in on the day you decide to exit the pool (meaning when you sign up a BPC or FPC). I can even understand the feed discount at time of delivery becuase that's what non-board markets typically do. But the impact of the initial price spread changes and the timing of the same can't even pretend to be market based and are completely out of everyone's control. Maybe when a producer signs up FPC's he should be locked in on the initial price spreads just so that there isn't any question as to what it is you're really doing.

After all, one of the big reasons for the 200% EPO (and why stop at 200% !!) is that presumably farmers wanted a drop dead price with no waiting around wondering what the feed discount could be at delivery. The least the CWB could do here is say that when you write up an FPC the inital price spread at time of sign up applies.

Almost everything the CWB does can and has been argued back and forth whether it's dumb or not. This is just plain dumb, all around.

[charliep]

Your calculations are right. Your $11.30/tonne is my 30 cents per
bushel. Perhaps where we different is I would argue that payment
spreads should be market based on any given day - not an arbitrary
number based on a federal government/CWB decision (you called it
red tape). The spreads would have widened a long time ago.

From a risk management standpoint, the CWB provides buyers a
market based grade and protein spread every day. Why not convert
this same spread into their producer payment options?

Will leave the adjustment payment alone. Always been a confusing
calculation for me having every thing to do with the way the CWB
manages risk and nothing to do with the effectiveness of the PPO
products to farmers. But then, I would manage risk by matching
farmer pricing against actual sales to customers.

[charliep]

I should highlight that my attitude is $11.30/tonne is relatively big money. You
will tell me the tonnage into a "B" train but there would be close to a $500
difference in the effectiveness of the fpc in one load - trump change to some
here but big money to me. Shouldn't complain because the farmer who delivered
on December 1 got a benefit they didn't necessarily deserve (would be
interesting on where the money) and the one who delivered on December 3 got
the realities of the market. As mcfarms has indicated, a person should knowing
precisely what you will get paid when sign a contract. This precision doesn't
exist in CWB contracts.