2011/12 Initial Payments Announced

[charliep]

[URL="http://www.cwb.ca/public/en/newsroom/releases/2011/news_release.jsp?news=072511.jsp"]2011 12 Initial Payments[/URL]

I like to look at the initial payments relative to the most recent PRO forecasts as a percentage. The recommendation likely went in off the May PRO given the 6 week time period to move through the federal government system.

1CWRS 12.5 protein - $208/tonne port. 65 % of the June PRO or 64 % of the May one.

1CWAD 12.5 protein - $230/tonne port. 53 % of the June PRO or 66 % of the May one.

Will list barley with the comment who cares. Feed barley will be traded cash again or an EPV. All malt barley should be priced through cash plus.

Select 2 row malt barley $230/tonne port or 66 % of the May and June PRO.

Feed barley $255/tonne port or 61 % of the May and June PRO.

[Burbert]

Alberta government opinion, who cares is
right on, except maybe the cow guys/gals,
yukkkkkkkkkkkkkkkkkkk! PC's doin their
best to promote the free, open, corrupt
market fer everything. Checked yer power
bill lately, sure like what we are now
paying, totally true example of how well
the open market works...........

[charliep]

I didn't think I ventured an opinion except perhaps on barley.

Burbert - Can you help me understand why anyone would accept less than full payment on delivery for barley or at least 90 % in the case of a feed barley EPV or a malt barley cash plus? When the market signals the CWB provides are the above, why would the livestock guys you hate so much (neighbors or maybe even yourself if you have cows) pay more than they are today.

If you think feed is too cheap, buy cows. You would have to work 12 months a year instead of 3 and have to leave your warm bed in the middle of the night to pull calves in the spring occassionally but you would tell me cattle are easy money.

[charliep]

Better yet. Buy bred heifers. You will have a lot less time for complaining next spring.

[carebear300]

Well said Charlie!!!!!!!!! You are human!!!!!!!!!

[Burbert]

Yeah, yup, gosh CharlieP, thanks fer all
the free insight, inta my operation.
Gov't boys always tellin us how to farm.
No end ta advice. Buy cows and farm
them. Buy pigeons farm them, buy bison
farm them, buy ostriches farm them, buy
emus, farm them, buy grass carp farm
them, buy rabbits farm them, buy chicken
farm them, buy fruit farm it. Can't
make any money, make it inta pie, then
the gov't boys'll stop buy and buy a
piece, you'll be rich then. Yup, yup
good ideas all of them. Comedians need
ta be exposed ta lotts and lotts a good
gov't advice. Here's some advice, LETS
CLOSE THE DOORS ON THE AB GAG DEPT ONCE
AND FOR ALL, SAVE A BUNDLE!!!!

[charliep]

Perhaps you are right. Will note the definition of insanity here is as follows: doing the same thing over and over and expecting different results.

On that front Burbert, any insight on what the PRO is likely to do this Thursday. will note that the converted to Canadian dollars MGEX futures wheat price dropped about $70/tonne between the May and June PRO but the actual forecast stayed relatively stable. The change has been reflected in fixed price contract values. My opinion is that July PRO should be down at least $40/tonne but will not go down this much.

The traditional world outside the North American high quality milling wheat is awash in wheat starting with increased supplies starting with Russia and Ukraine. So I guess it your opinion Canada should continue to go head to head with these non traditional wheat exporters that have a major freight advantage into major importer markets.

Sorry for being boring carebear300. An economist mind.

[charliep]

The graphs:

[URL="http://www.cwb.ca/public/en/farmers/producer/historical/pdf/2011-12/2011-12fpcbpccharts.pdf"]2011 12 fpc basis charts[/URL]

[charliep]

While on my mind, would watch what the CWB does with spreads on the July PRO. Any premiums in the market will be on the high quality/high protein end. Spreads will start to reflect this.

As an example, the initial payment spread between a 1 CWRS 12.5 and 1 CWRS 13.5 is $6.65/tonne premium. The spread between these proteins on the June PRO (watch July) is $26. Highlight - don't apply high protein wheat against an fpc early in the crop year. Watch the July PRO.

The initial payment spread between 1 CWRS 12.5 and 3 CWRS is $19/tonne. The spread on the June PRO is $20/tonne. Not so bad but I would watch for this spread to widen as mid quality wheat goes head to head in terms of price competition with Russia/Ukraine, etc in low priced/less quality concious markets. Deliver the mid quality sprectrum of wheat against FPC contracts early.

Pay attention to the July PRO.

Pay

[charliep]

Error alert - mixed in 3CWRS 12.5 with straight 3CWRS. If I had done straight 3 CWRS (no protien premium), the initial payment spread is $29.75/tonne versus $20/tonne on the June PRO. A 3CWRS 13.0 initial payment spread is $14.75/tonne versus a June PRO of $9/tonne.

[TOM4CWB]

Dear Charlie,

THe pooling of the spreads and basis between grades is MOST annoying.

How any true market signal actually gets through the goofy CWB PPO system seems to by coincidence.

Truly a shame we have not resovled this problem after over 10 years of CWB PPO pricing.

It seems this is mot likely not an accident... but by design so transparency is prevented on sales.

Or NOT?

How the CWB swings the CWRS basis $20/t in the last half of May 2011... is beyond explanation... as I truly doubt they were selling enough 2011-12 milling wheat to know what to charge grain growers.

Perhaps someone can explain what the CWB is actually doing... besides pooling our PPO cash prices?