cityguy
As I understand the current basis price contracts (BPC) that you can take right now, you are taking the futures price then the basis is assigned by the cwb starting in feb 11.
They should call that a futures price contract.
You said "There is no price discipline from the farmer to the CWB in the current system."
Actually there is because the only grain the cwb has to sell is that signed up on PPOs. The pooled grain is not known until contracts are signed after september 1.
This is exactly what happened in the durum market. The cwb was selling grain they thought they had but farmers wouldn't commit the tonnes because of poor prices or they had sold it off board for more money. Then the cwb couldn't fill boats and had to go to GDCs. And the fact the cwb did not offer up incentives tells me they blew out the durum they did not have contracted from the farmers.
Who pays - farmers of course. And the cwb blames the farmers for not delivering when it was the cwb's fault for not watching off board prices that were higher than their PRO's. That in itself told farmers to sell in march - June 2010 their durum to the off board market.
Also keep in mind the cwb was selling durum they didn't have contracted to them, so the farmer does, at least in durum, tell the cwb what to do. But the cwb doesn't listen which in why there was a million dollar demurrage bill on one ship alone.
As I understand the current basis price contracts (BPC) that you can take right now, you are taking the futures price then the basis is assigned by the cwb starting in feb 11.
They should call that a futures price contract.
You said "There is no price discipline from the farmer to the CWB in the current system."
Actually there is because the only grain the cwb has to sell is that signed up on PPOs. The pooled grain is not known until contracts are signed after september 1.
This is exactly what happened in the durum market. The cwb was selling grain they thought they had but farmers wouldn't commit the tonnes because of poor prices or they had sold it off board for more money. Then the cwb couldn't fill boats and had to go to GDCs. And the fact the cwb did not offer up incentives tells me they blew out the durum they did not have contracted from the farmers.
Who pays - farmers of course. And the cwb blames the farmers for not delivering when it was the cwb's fault for not watching off board prices that were higher than their PRO's. That in itself told farmers to sell in march - June 2010 their durum to the off board market.
Also keep in mind the cwb was selling durum they didn't have contracted to them, so the farmer does, at least in durum, tell the cwb what to do. But the cwb doesn't listen which in why there was a million dollar demurrage bill on one ship alone.
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