Flexpro

[silverback]

Can someone remind me when the sign up deadline for flexpro was in the past?

I heard the girl on the radio today telling us how they were "extending" the deadline into march? She then said how they were trying to alleviate the production risk from the growers for the august? deadline.

Is it just me or does it seem coincidental that they are concerned about reducing our "production risk" now that they are staring into the eyes of the open market?

[TOM4CWB]

Silverback,

As long as you do not mind paying the pool adjustment factor... (subsidise pooled grain)... on top of the skytso basis that is based on the CWB PRO... everything is hunky-dory!

Talk about empty shells...

THE BPC.

The FPC.

The Flexpro.

200 percent EPO's.

The more programs they pretend exist... the more folks they can hire at the PPO dept.

What about a competitive cash price???

NO.

Only in Canada you say!

[charliep]

End of July before the begginning of the new crop year. Will note the inclusion of the adjustment factor after August 1.

[btjadenlepp]

haven't had time to look at the details,
but charlie maybe you know the answer to
this offhand - if the adjustment factor is
applied after august 1st, how will the
flexpro be any different than the fpc?

[charliep]

My understanding is won't be substantially different. The only thing that will make the flexpro different is that it is a volume only contract. No payment, basis or futures locked in. A farmer can follow the flexpro daily and pull the trigger on the entire price any time until July 31, 2012. They just follow the one factor - price. Still working in my own mind on how would fit into a marketing plan and which of the tools to use in given situations.

Still uses initial payment spreads. Frustration!!!!!!!!!

Too bad the CWB isn't prepared to go for straight cash pricing or even a modified cash plus for some of the smaller wheat classes based on individual sales activities like they do for feed barley or shorter pooling periods. Lack of creativity and a warped sense of risk management around the CWB pricing pace model doesn't bode well for their future in an open market.

[charliep]

One of the things farmers really need to understand about the CWB is their pricing pace model and how the CWB handles price risk/evaluates its performance. A farmer likely follows some sort of canola pricing pace model as they market their own crop over a 15 month (not unlike the CWB does). A farmer needs to understand they are tied to the CWB pricing pace through the way the PPO programs are operated. You have to really think through how you are going to approach the decisions about which contracts to use (fpc, basis and flexpro) or the CWB processes can work against a farmer in their own sales plan for their operation.

[btjadenlepp]

you're absolutely right charlie. that
pricing pace model was the topic of one
very unpleasant screaming match i had with
someone over there last winter. it was the
reason the basis got smoked in dec/jan,
even though u.s. basis levels were rising,
and i completely underestimated how
quickly ahead of the jan 31st fpc deadline
that they would erode the opportunity.

[TOM4CWB]

Brenda,

It is simply an excuse to take money from PPO folks who need cash... and pad the pool accounts!

This is a scam. The CWB has had NO intention of treating commercial growers with bills to pay... a fair price.

[charliep]

It is a new world. As indicated previously, close to 50 % of the wheat ex durum delivered in the 2010/11 crop year used one of the CWB producer payment options. This creates a whole new risk profile for the CWB and how it operates. The CWB manages their price risk first are the pooled payments(keeping in mind the pricing pace model) and offers the products they can to farmers as a service. The CWB is not in the business of handling farmers individual risk outside the pooled price.

[charliep]

To help me out, why isn't there a flexpro for durum? Or another way, an effect low cost way of offering a daily price outside the current pooled price that is closer to reflecting cash values.

Even going to a program similar to cash plus for malt barley (match durum prices against a sales activity) or early payment value (match pricing against a group of sales over a set time period the way that is done with feed barley) or cash pricing at the end of the crop with no tie to the durum pricing pool).

these kinds of programs/ideas are what will be needed in the open market future versus the highlights of what has occurred in the past.

[bucket]

It is probably hard to do on durum because the cwb might have some long term deals in place. Remember Algeria and their buyer said how they got special treatment from the cwb.

That special deal meant pricing in 2009, storing it, and delivering it now, at the expense of western canadian farmers.

How else do you explain a thunder bay price of $17.50 at the start of the crop year and a pro at 12 bucks?

And then factor in the US durum supply that will be non existant this year, where does a buyer go for durum?