Katoe... You missed risk management 101... Princess WINS!

[TOM4CWB]

Dear Katoe,

You tried to make Bucket look like a back woods farmer in the Canola thread below... but you exposed your ignorance as well.

We on our farm traded futures and options for decades. Princess kept a running track on the profits gained by such trades... and guess what.... even backed up by our risk management training... GROWER CASH selling BEATS all the fancy tools... IF you use a blended approach of deffered delivery and 'free' options marketers offer.

As has been stated below... the vast and overwhelming majority of options purchased expire worthless because few can afford to buy options in the money in the first place... the risk is wild on that move.

The CWB FAILED in its marketing plan and services... BECAUSE they did not manage for this risk... the risk of spending TOO MUCH on risk management.

The risk reward needs to be 2 to 1 for most growers to make money in the long term. AND 20 percent of our decisions will make us 80 percent of our profit.

Therefore diciplined and methodic procedures need to be implemented... to come out at 80 percent of the whole optional peak value of opportunity.

The CWB shot for an average...50 percent will be the long term result. BAD move.

Katoe... take it back. Bucket selling in a diciplined manner... easily could beat CWB pooled prices and PPO front tools that were based on those pooled prices. HANDS DOWN... the CWB did not get it... Princess did... and could teach the CWB many lessons!

Most of the time the CWB losses on trades were hidden in the pool accounts. Hence the reason they would NOT credit us with futures profits on trades we locked in with the CWB.

[bucket]

Tom said

""Most of the time the CWB losses on trades were hidden in the pool accounts. Hence the reason they would NOT credit us with futures profits on trades we locked in with the CWB. ""

Many losses have been taken out of the pool accounts and the last one was over 250 million on a rogue trader's mistake at the cwb. They covered it up by hiring ex cwb employees to write a report that farmers were never allowed to see.

[TOM4CWB]

Didn't know that... but no surprise at all. It obviously cost the CWB it's single desk... in the end.

Telling LIES... NEVER pays... in the end... folks find out.... and BANG... they that choose to deceive LOOSE.

[bucket]

Tom

You remember the 250 million in discretionary trading losses a few years back.

That's what I was referring to.

[TOM4CWB]

Bucket,

I also remember Chairman Ritter telling me to get lost... because the $500/t buyback cost to regain control of our wheat... was small potatoes in what he was dealing with in Feb of 2008.

It almost got him... or perhaps the stress actually ended up and did get him. Ken knew better... and was not honest with us. In case you did not remember...

He is dead... of brain cancer according to his obituary.

[cottonpicken]

Not that i know the details but....

Is it not slightly hypocritical to talk about using
options in one sentence and then blaming the board
for losing money on the same strategy you lose
money on?

[bucket]

cotton

Not sure if that was pointed at me but I don't use futures or options but I am sure the cwb does or did and lost a shitload of money gambling.

The point about using options or future or whatever is to reduce risk as I understand it.

How does the cwb have any risk when they buy grain from farmers at 25 per cent of its value and place an IOU on the rest. Then they sell it to a country like china or algeria and get paid in full, and since there is not to be any credit sales they have the money in the bank which they disperse over the next 12 months???

Why does the cwb have any risk in the market when, if the prices go down they just adjust the price to suit their sales. And essentially take it out of the farmers pocket if they make a mistake, like the 250 million discretionary losses.

Just asking.

[TOM4CWB]

Cotton,

Did you actually read and understand the FIRST posting I made on this tread?

How would it be hypocritical to point out that 'risk management' ... when the cost is more than the returns it handles... is a money loosing decision.

Brokers and consultants enjoy the business... and risks like MF Global are also in play.

I have thought about buying black oil puts as a cross hedge.... as at times these can cost less in volatility and time value... if black oil is worth more in forward months. If oil drops... the US dollar rises and grain prices drop.

Looks like a reasonable correlation... but need a US account to trade this.

[TOM4CWB]

Bucket,

The CWB normally did risk management for the pool, the buying customer, and the grain grower. All three required different trades and often were opposing trades... which meant that the CWB was on both sides of the same market at the same point in time. However this shouldn't cause losses if properly executed as even premiums for options and futures losses SHOULD have been paid by: growers in the PPO system... buyers that asked for risk management... or the pool traded futures which would simply be a lower pool value paid growers in that pool.

A CWB Contingency fund with massive losses... meant a failure in the execution of the risk management system.

Grain companies work on margins... and do NOT take these kinds of losses....

Especially on grains like wheat that have liquid futues that can be executed back to back with no large financial risk associated with the transaction.

[bucket]

So the short story is, they ****ed up? And we paid for it?

[bucket]

I am pretty sure even Viterra would have cleaned house after losing 250 million. The cwb fellows got bonuses and/or promoted.

[cottonpicken]

No,this was just a simple observation,i don't really know much about the situation.

Losses do happen in the option's market.

And if warren buffet wanted to take over my
marketing i would say "no thank you".