Wheat sales

[lesm]

Trying to decide if I should sell the rest of my wheat on the fixed price by Jan./31 or sign the July basis contract. I have #2 -13.5 protein and July Minn. closed @ $9.24/bu. Any ideas where the price of wheat will go?

[$short]

Minny wheat up overnight again........

[GreenValley]

I give you hint perhaps holding a bit. Kansas winter wheat is now 27 percent good as to compare last year 69 percent. Shortage moisture is problem down there.

[mbratrud]

I am leaning towards a May Basis, maybe leaving 20% or less in the Pool as a just in case.

[mustardman]

leave it in the pool

[charliep]

Curious why anyone would stay in the pool.

PRO (1CWRS 13.5) is $325 port. Fixed price contract today (Jan. 19) is $339.27 - $14.27 higher.

Basis $33.58 but an adjustment factor of minus $27.30. Pooling pace target end of January 60 %.

Take the money and run. After the adjustment, the actual relationship with futures is crap (flexpro much better) but the CWB is the only game so you have to suck it up.

[charliep]

A frustration is the CWB doesn't show the adjustment factor in their historical charts.

[URL="http://www.cwb.ca/public/en/farmers/producer/historical/#2010"]CWB charts[/URL]

[charliep]

I am going to toss something up and highlight the importance of knowing what a good basis is even with a CWB grain and being prepared to lock in.

November 30. will go with your use of may futures. May futures basis $32.01. Adjustment factor - minus $3.96. Actual adjustment $28.02 over.

[URL="http://www.cwb.ca/db/contracts/ppo/ppo_prices.nsf/fixed_price/fbpc-wheat-2010-mhrs-20101130.html"]nov 30[/URL]

January 19. May futures basis - $30.75. Adustment - minus $27.30. Actual adjustment - $3.45 over.

<a href="http://www.cwb.ca/db/contracts/ppo/ppo_prices.nsf/fixed_price/fbpc-wheat-2010-mhrs-20110119.html">jan 19</a>

Benefit to someone who signed a basis contract in November versus today - $24.57/tonne.

[charliep]

Four postings in row is too many but I keep thinking of things.

If I understand correctly, you can do an fpc on CWB deliveries you have
already made/only taken the initial.

An adjustment payment is likely around the corner and initial payment
spreads for 3CWRS/2 CWRS low protein are likely to increase again. Use
an fpc to lock in the current initial payment spreads on deliveries you
have already made/protect yourself from wider ones in the future.

[VK58]

Trying to do the math,if the target of 60% of cwb sales are made, how much higher would it need to go for the pool to better todays fpc?
This would be assuming they met their proposed selling pace. Any ideas or are there to many variables/unknowns?

[boarderbloke]

Charliep, I realize that you won't do this yourself, so I will! People here should be reminded that Nov 6/2010 "charliep" posted a message giving everyone a heads up on the positive basis for CWRS wheat. The high positive basis was an anomaly for FPC. On Nov 3rd basis could have been priced at 36.61 DEC10 and 28.35 MAY11.

What is really sad is that posting this message in a "commodity marketing" form, NOT ONE PERSON commented or replied, IMHO, I think that speaks volumes about the state of farm based marketing in western Canada, and perhaps why we do not have dual or open marketing for wheat.

[boarderbloke]

..MGE wheat kicking a$$ again....and loving it.

[charliep]

VK58

With a caveat I suspect the January will increase and the CWB indication 60 % priced end January, you would likely need a $1/bu ($38/tonne) increase in sales prices from January to December to generate the $15/tonne difference in the fpc. Not including cost of money/interest.

[charliep]

A strategy would be to wait until the PRO is released in January. I would expect will be $10 to $15 higher but only a guess.

Your risk (not likely) is the CWB shuts down the FPC program early. Perhaps equally interesting would be the CWB decision to extend the program beyond January 31. Strangely enough with the adjustment and spreading the fpc pooling risk over the whole pooling year in line with the pricing pace.

[charliep]

Meant to say in the say sentence that extenting the FPC may actually be a good thing for the CWB risk management program.