BPC 8.94 with more flexibility than SPG Minot

[cityguy]

Thanks for the clarification. I haven't ever talked to the CWB about the in's and out's of their hedging but clearly you have and they've been pretty open with you as to what they do. Too bad they aren't as open with their stakeholders. Placing their entire hedge in the nearby is dumb. Let's say for instance that they accept 10 million tonnes on the "A" series and do 4 million tonnes of FPC/DPC's. They shouldn't be putting the net ownership - cash "ownership" less cash sales all into the nearby futures. They should look to spread out their hedges based on how much they're going to sell against the relavent futures delivery month (liquidity considered). Anything else wouldn't be "orthodox".

All good to know.

So - what should a Canadian farmer be doing in terms of marketing his new crop wheat basis today's futures prices and a bias that the basis will be 0 to 10 at the end of February. Should producers, by and large, be 0 to 10% sold, 20-25% sold, 25 to 50% sold? Or are you of the opinion that given that the deck is stacked against those that market outside of the pool that farmers should simply put it all in the pool?

Also - and this is a question for commerical producers - would the FPC's be more attractive if they were combined with a delivery window and that there was a carry shown in the various FPC delivery windows. Should those forward contracted FPC's be the only tonnes that the CWB should look to market pre-harvest?

[timm]

We need the basis component of the BPC offered
sooner !!

[cityguy]

Think everyone would agree with that and don't know why the CWB doesn't do it. Presumably because there is virtually no business being done for new crop at this point in time so there's no point. That being said, you can get new crop basis levels on non-boards plus you can get new crop basis levels in the US, so the CWB could take a flyer.

So let's say that worst case scenario is that the basis is -10.00. When put with today's futures would you be a seller of 0-10% of our anticipated milling wheat production, 10-25, 25-50 or over 50%? (You will have a basis in less than two months so you can still do futures today and match it up with the basis you're given in a couple of months).

[timm]

Easy money is usually hard to come by,i am 30%
priced !!

[charliep]

December 2011 BPC was about $325/tonne today (Dec. 30).

You can run through different scenarios about basis but likely provides a 2011/12 local fpc value above $7/bu.

Not a bad place to get started. As agreed, clarity around process and basis would make this decision easier.

[URL="http://www.cwb.ca/public/en/farmers/producer/historical/pdf/2011-12/2011-12fpcbpccharts.pdf"]new crop chart[/URL]

[charliep]

The $325 was a fpc for a 1CWRS 13.5

[charliep]

To the original posting and question posed.

Lets assume that CWB pricing/payment programs could compete with US elevator risk management alternatives both at on a value at the farm gate (US price minus costs to get there) and contract term basis. Based on the title of this thread, the CWB could do that today.

What would be wrong with an open market situation in western Canada where the CWB competes for business along with a number of different marketing alternatives from other buyers including ones across the border?

If the CWB is preparing itself for this new world, what does it have to do differently? What would the new business structure look like?

[cityguy]

Thanks timm - so when you make the decision to be 30% sold are you presuming that $7.00 and an average yield is a profitable level for you or are you a little more conservative and presume an 80% of average yield?

As for charliep - all good questions and deserving of a different thread/topic. In fact, would suggest that AV set up a completely different "meeting room" to discuss CWB commodity marketing and leave commodity marketing to discussions on how to manage board/non-board marketing given the current tools in place. (might want to punt the dairy meeting room - don't think anything happens in there.)

[timm]

We feel comfortable shooting for 60bpa the last 4-5
years.Charlie ... BPC for 2011-12...not FPC 2010-
11.No talk of Force Majeure yet for 5$ yet!!