New crop wheat

[jcv]

In discussing pricing, contrcting and options, One thing I havent seen mentioned is that contracted crop will get the available elevator space. This will be a noteable change from a "call" system where everyone could bring some crop in at harvest.

[Daylate]

good point,
unless wheat goes crazy in price i probably wouldn't FORWARD contract over 1/3 of my hrsw for harvest delivery.
but there probably is guys that would.
it will be interesting.

[TOM4CWB]

jcv,

Contracted new crop Wheat is the same as new crop Canola. Bought the same way... sold the same way.

If the buyer is dependable in taking in harvest deliveries of Canola... the same system is being used to market the wheat as well.

Our local elevator has already booked unit trains of milling wheat for October 2012 to meet sales. Same goes to fill Canola sales they have on the books.

[jcv]

Good to hear, as I said had not heard much on the topic. I have heard that if we get a decent winter wheat harvest, then space for the spring wheat may be an issue. Nobody has mentioned delivery at harvest as a concern, in some instances it may be.

[charliep]

It could be an issue in some cases and a reason to forward price/arrange delivery - there will be no referee to ensure equal acces.

I note however that delivery has never been a guarantee under the current system. You had some alternatives to delivery your first "B" train or so but after that the process was sign an "A" series contract, wait for the CWB to determine acceptance, wait for delivery calls and then, find out if elevators within a reasonable trucking distance of your farm have space. All this has to be put in the context of the grade you harvested and whether that the CWB/trade has sold your quality/protein for nearby shipment.

Delivery in the new world will be a commercial decision based on that grain companies needs and farmer contracts with no commitment of access to everyone.

On the cash flow front (realizing that fixed price/flexpro contracts existed for payment), you are more likely to get fully paid on delivery in the fall. Implications for cash flow and from there the quantities and types of crops you sell off the combine will change starting August 1.

Farmers who follow a fairly disciplined approach to market planning and risk management to meet cash flow and financial requirements are going to like the new world. It won't be perfect (still the uncertainty about grade/movement and the 90 day delivery window in most grain company contracts) but it will be better than today. Those who don't have strong business relations with grain companies and who delay all marketing decisions to the fall when the crop is in the bin are likely to suffer/get crabby as neighbors contracted grain volumes get preference to theirs/potentially eat wider basis levels.

[Braveheart]

Transportation will be the determining factor in keeping elevator space. I predict we will move to a more commercial logistics system just as a natural evolution without the CWB monopoly around.

As Tom has pointed out, companies are booking transportation for their forward contracted obligations. Just like canola.

I hope and expect that elevators will actually become high throughput terminals, instead of big storage facilities. That storage being paid by farmers.

[Burbert]

The new world, better bee f&**n perfect.
Comedian framers have given away, a huge
amount during the nationalization of the
grain industry, ta the Comedian gobermont.
RITZ said it would bee perfect, er is he
two a one trick pony?