NEW CROP WHEAT

[rbgordon]

Does anyone know where to find new crop wheat and barley quotes on the web? There were some posts here on the weekend saying that Viterra was offering $7.40 on Friday. Has anyone heard of Richardson, Cargill and P&H posting bids as well. We are in for some interesting times in grain marketing and we all need to follow the markets close.
Thank you in advance.

[Hopperbin]

Does anyone know how we will be able to determine the protien and grade spreads. gotta admit canola is a much simpler animal.

[pgluca]

My Viterra TSR gave me some August 1st HRSW contract prices. They were not displayed on their price page on their Web site though. When I asked about protein spreads she said they would be the speads in place at time of delivery. She gave me some present spreads but they were not CWB spreads they were about half as much between 13.5% to 12.5%.

[FarmRanger]

Viterra didn't quote grade differential pricing yet to
me either. Although when you think about it, this
is more a function of how much and what quality
grain is available after we harvest it. Something
no one knows until harvest, and we never knew
under the old system either.

How do they handle this south of the border?

[Hopperbin]

Risky I think to pre price in that way. I envision hypothetically that say for instance come harvest and farmer x gets a 50 cent premium for his 14 percent protien. Mean while the very same elevator offers a buck premium to new sellers. This sort of thing in a way does happen when selling Canola. Once priced and contracted there is no more bargaining power. Cargill will typically give new sellers a better price over others with stored grain, while Bunge's policy is to not do that. Now days delivery unpriced and leaving on storage is very uncommon. I see the same train wreck happening in wheat if we are signing contracts that leave the price spread open. The spreads should be locked in at the time of contract not at the time of delivery. This is what I will look for in a contract and in my opinion other farmers should also.

[malleefarmer]

in australia we have both some buyers lock in spreads at time of execution of contract, others is spreads at delivery.

[farmaholic]

TOM4 where are you? I see some other people think "open ended" contracts aren't a good idea either. You are right on the money Hopper. I will harvest, bin, and determine what I have before I sign a contract. Canola is a much easier beast. When push comes to shove I don't think it matters how good a relationship you have with the terminals. Exercise your marketing power boys!!!

[Hopperbin]

Could be wrong but I think I have another point here. Please tell me if I am wrong. Lets think of ourselves as profesional gamblers, which in fact we are :-)...

Now say for instance the contract is based on 13 percent protien, I don't know what the actual contracts are based on but to prove the point we will put it at 13 percent and say for this exercise that 13 is the average grown generally. Now if a farmer is a proper profesional gambler I believe he would try to lock in the protien spread before hand. I will make the point in just these next 3 sentences. Ignoring world suppoly and demand changes in this instance. If Western Canada produces mostly higher than the spec protien then chances are the contracted farmer will be in the majority of higher protien and recieve less for his higher protein. If Western Canada produces mostly lower protien and chances are the contracted farmer will be in the majority of lower protien and have an increased deduction. Both time times the loser of the odds. So I believe as a profesional gambler I would want to take into account the protien spread at the time of contract and use that in my decision to make the contract in the first place and have it written in. Same senario I think works for grade. I am a profesional gambler unless proven wrong.

[bucket]

hopper

What do you do with uncontracted 2010 wheat at 12.5 px?

Tried to get a reasonable price today but it looks like it would be just about as profitable dumping as feed.

[pgluca]

I was looking to price wheat in the bin for Aug 1 delivery when I phoned Viterra. I am not very big on pricing too much I haven't grown. On the issue of protein spreads, I believe part of the power is in our hands. If few people will sign a contract without designated spreads they will have to offer one. The same goes for an "Act of God" clause, however if they want to tie you up without that clause, then the price should be better so you can sell your position or protect your self in the futures market.

[Daylate]

Good points,
Viterra and others will have to make a contract that gives a spread or slide on the protein and grade in order to get contracts. No one is going to sign up much of their new crop this way, and thats what i told the buyer today at Viterra, and he agreed it was too much risk and that all of the customers he talked to today said the same thing.
Durum is still a magically calculated number so far, would be nice if we could base it with HRSW and add a basis, along with the protein and grading scale.
I guess HRSW has a basis to it too now, like canola for frieght and handling.
These are great problems to discuss!!!

[TOM4CWB]

Daylate,

Jan 23/2012 Durum trades on the ICE futures exchange.

IF we get our act together... and join both sides of the 49th (US and CDN growers of Durum) together this will be the vast majority of milling durum (over 70 percent I believe) traded internationally. Now that beats even the CWB 'single desk' hands down!

The same for high quality milling wheat (DNS/CWRS) and barley with the new ICE contracts that start trading January 23 2012.

[notaredneck]

Get our act together? That sounds like a socialist comment!

[VK58]

Daylate's comments on the buyers having to offer guarateed protein/grade spread sheet to attract his wheat is preferable but highly unlikely. The reason as I see it is the spreads are not hedgeable on any openly traded market. In my comments below "selling 2012 wheat" I mentioned the extreme volatility of protein spreads in particular. This fall 15% pro hrs went from no bid to even priced in sept, to $2.00-$2.50 over the base in Oct and has now trading in the range of $1.50 to $1.75 premium. These dollar amount are per bushel at the terminals in Minneapolis.
Each local elevator would have a different spread depending on their customers quality of grain. It is not uncommon to have lower pro wheat 1 week be close to par, then the next week trade at least a $1/ bus lower. A lot of 2010 wheat in ND stayed on farm until late this year as the 2010 crop was in general very low protein. Conversely the hi pro wheat enjoyed a very good basis (close to $5.00/bus) if i remember correctly. This is why a lot of ND farmers hesitate to pre sell wheat, the basis risk is substantial.

[bucket]

Pioneer just texted they are in the game.

That means viterra, pioneer, P&h, johnston are bidding.

Just waiting for the new cwb bids and a couple more players to announce prices and then start evaluating who should get the business.