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NEW CROP WHEAT

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    #11
    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!!!

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      #12
      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.

      Comment

        #13
        Get our act together? That sounds like a socialist comment!

        Comment

          #14
          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.

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            #15
            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.

            Comment

              #16
              VK58,

              I posted this last week...

              was just reading my ProFarmer from down under... help me to understand...

              *The high protein spread between MGEX and KCBOT has averaged 250c this week,
              This is down 30c from the Oct average.

              *However this is still at an historical high level, after averaging only 136c in 2011.

              Please tell me why the basis is so far out of wack... when our CWRS 13.5 is worth a $1.00/bu MORE than KCBOT
              vs. 2011???

              I had heard in the trade that in possibly the last 6 months CWB's risk managers were using KCBOT instead of MGEX for doing risk management on CWRS. Lack of liquidity was the reason for the move... which would have really whacked our basis to growers.

              New Crop Wheat will very likely have a futures quoted. My contract has a futures (Sept12) and Basis.

              Comment

                #17
                Don't confuse me with a CWB apologist, main reason I started reseaching protein spreads @ Minnepolis was the CWB's numbers. My point is the volatility of the spreads and the risk to wheat marketers.

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                  #18
                  In reply to 2nd part of your post,Minneapolis has had, at times, problems with adequate volumes. Maybe they felt uncomfortable with trading an increasing volume of positions. I guess when they audit the boards books we will get an insight into their marketing vision.
                  Now a question for you, How do you see 20 mmt of wheat being traded, how much thru Winnipeg ICE, Minneapolis and KCBOT. If MGE has questionable volume will ICE have adequate volume to make it creditable market

                  Comment

                    #19
                    VK58,

                    CBOT has a 10mmt traded product base about one third of the DNS/CWRS market.

                    If the new ICE milling wheat works well... specs could use ICE instead of CBOT.. time will tell.

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