Time for SHOW and TELL at the CWB...

[TOM4CWB]

Thalpenny and the CWB;

Things seem to be really quiet, maybe to quiet?

Just what was your wheat marketing plan a month ago, and how is it working out for new crop wheat??

Were you by any chance caught short in this rally, or were you so short you were the cause of the Kansas and Minneapolis rally today, short covering your positions?

I was told at the Accountability Meetings this spring that you could read the markets and were experts in extracting the maximum profits from these markets… is this why you were forced to widen our basis on our wheats by app. $20/t… ending the PPO before we even had a chance to find out roughly what our production might be?

Maybe you could explain exactly what your marketing plan is now, how much of next years wheat crop you plan to sell, and when?

Are the PRO’s and indication of what you were planning… or were you just bluffing everyone?

I would be really, really, really interested to know, especially now that you have essentially ended the wheat flat pricing opportunities for this upcoming crop year… and we are forced again into the pooling accounts…

Could you share a little planning info with the “designated area” producers who are supposed to supply the wheat to you?

What exactly has been going on at the CWB marketing and risk management department in the last week?

Here is what the AWB had to say;

“AWB today announced its 2002/03 Estimated Pool Returns (EPRs) for each National Pool pay grade.

AWB National Pool General Manager Sarah Scales said AWB had lifted its estimate for benchmark APW to $220 per tonne (FOB, GST Exclusive) - $5/t above the top end of last week’s estimated range of $205 - $215/t.

"During the past two weeks we have seen some significant rallies in US wheat futures values, primarily on the back of production concerns in the US Hard Red Winter wheat crop," Ms Scales said.

"As a result of those movements, and our active management strategies for both futures and currency, we have been able to increase the APW estimate above the previous estimated price range," Ms Scales said.

AWB’s 2002/03 estimates include APH at $244.50/t, AH at $232/t, ASW at $214/t, and ADR1 at $280/t."


Imagine that…

weekly updates about what is happening…


I looked at OWPMB prices, and didn’t see any major basis shifts or prices dropping there, so what gives… at 423 Main in Winnipeg, can’t you do any better than what you have done over the past week?

Is this why you must churn billions of dollars, to cover your margin calls… and buy back your shorts?

Maybe it is time for SHOW and TELL…?

[AdamSmith]

As someone who is seldom suprised by the things that go on at 423 Main, I'm blown away by whats going on there these days.

The same thing was done to barley.

The spread between October Bly on the WCE and the CWB fixed price for the month of june ranged between 3.25/t under and 6.25/t under. On June 26 the spread was 4.55/t under Oct. Bly, on June 27 the spread was $25.3/t under and on June 28, 25.9/t under.

Between June 26 and 27 all major markets in North America rallied. The cash price in Lethbridge and Calgary rallied. WCW Oct Bly closed June 26 at 152.4, on June 27 the close was 156.7. an increase of $4.30/t cash in Lethbridge went from $167/t on June 26 to $170/t on June 27. Wheat was up and so was Corn.

Yet the CWB fixed price for barley went DOWN form $147.85/t on June 26 to $131.4/t on June 27.

The Lord and Saviour himself, couldn't justify that move.

Why must we put up with these shenanigans and the lame and pathetic excuses that acompany them?

Why thalpenny? WHY? WHY? WHY?

How is it possible to justify?

Does the CWB and it's minions not realize the damage they are doing to the CWB when their actions are so stark and naked.

I guess what has me so blown away is that there not even trying to hide their trickery any more!

[parsley]

If one was describing fraud, would this qualify as an defining example?

Parsley

[TOM4CWB]

Thalpenny and CWB,

How can the CWB say that the actions that are mentioned above, "maximise farmer's returns", which you have said is the prime goal and motivation of the corporation?

Were the actions taken those of "Superstar" marketers, who have the best information collection and marketing system on earth?

How can we trust you...?

If you were us, would you trust the CWB...?

Why are you not even trying to fix these mistakes, you announced a new barley PRO last year between regular PRO dates, why not correct this situation?

[charliep]

If I were a poker player, there will be an interim/early PRO forecast prior to July 25.

A question I have to ask is why we are even talking about feed barley PRO forecasts/PPOs. As Rain indicated, new crop prices around Calgary and further south are $3.40/bu plus. The are likely very few places in Saskatchewan that aren't within spitting distance of $3/bu. The next question with 10 MMT of domestic feed barley use (down to 9 MMT in the current and 2002/03 crop years) and 100,000 to 300,000 t of feed barley exports, why is barley still under the CWB.

The malt picture is even more interesting. Malt selections are likely to be back in southern Alberta again given the drought in other regions (likely heavy fusarium infestation across S.E. SK./MB.). Current PRO are not competitive with new crop feed offering so why would anyone take an initial payment and wait for finals. The domestic maltsters are in real trouble this year sourcing supplies unless the CWB decides to trim market to N. America only.

[TOM4CWB]

thalpenny,

Why no response to these issues?

Aren't you wasteing our blood sweat and tears..., (our money by the way) by holding focus groups?
It is obvious there are real problems with your marketing, why won't you even respond and own up to them?

How do you expect farmers to trust you are doing a good job, when there is no respect for us... which is obvious by what you have just done to us...???

[TOM4CWB]

Whoa there Tom4CWB, the questions here are a bit unclear, so your comments are a bit unfair. But let me provide some more information.

Regarding the PPO’s - remember the Fixed Price Contract is determined off of the PRO, minus risk, admin and time value of money. The risk adjustment hasn’t changed much from last month. The PRO value is anticipated returns from all markets over a 12-15 month period, Aug 1- July 31. And it is subject to change.

So inbetween the PRO’s, the Fixed Price Contract ‘floats’ with the relevant futures month (Dec or Mar) and currency exchange. On the day the PRO comes out, this relationship is realigned with the PRO to arrive at the new Fixed Price value and the process continues through the next month.

For the Basis Contract, the ‘basis’ is the difference between the FPC and the relevant futures in Cdn $. So when the FPC is realigned with the PRO, there can be a corresponding adjustment to the basis, which we saw just after the June PRO.

The difference between the May PRO for 1CWRS 13.5 and the May 23 (PRO day) FPC was $3.10. This is the total risk, admin and time value of money. On June 27, the difference between the 1CWRS 13.5 PRO and FPC was $3.15. So there was only $.05/t increase in the risk value.

The fact that there is a run up in the futures recently created a pretty significant adjustment that caught your attention. However, the PRO is not based sole off of the futures market, it represents the cash trade value of all marketings over the whole period.

There are still some longer term factors to be considered. For example, what impact on HRW and SRW plantings this fall will the new LDP prices have? A return to average yields and slightly higher plantings will have the prospect of higher supply in the last half of the year entering into the market. The EU is forecast to have about 10 million tonnes higher production in 02-03, and the IGC pegs them at about 3-4 million tonnes higher wheat exports. There is also the forecast of a stronger Cdn dollar. Every penny increase in the dollar translates into about $3.50/t decrease in PRO returns. So the US futures markets are reflecting the shorter crop in North America in the near term. I’m sure the CWB will strive to take advantage of that stronger nearby market. Watch for updated USDA info out this week I believe.

That provides some info on the mechanics - the How. Now about the Why do the PPO’s that way.

To provide the basis and the FPC contracts, either the basis or the Fixed Price has to float with the futures daily. This provides daily prices that are tied to the market for farmers, and provides the link to futures activity. It was decided to be preferable to have the Fixed Price float with the futures, and have the basis fixed for the month, as opposed to the other way around. This would provide more flexibility with the FPC as opposed to just having a fixed price at a discount to the PRO for the whole month.

When you look at the 1CWRS 13.5 FPC July 9, it is 208.36 compared to the PRO at 201 and the Dec Mpls futures at 196.74. Remember the PRO is at St Lawrence position, and the Mpls is basically a Duluth price. So there is a locational difference that should exist.

If we did it the other way, the FPC would be stuck at 197.85 (PRO 201-$3.15 deductions) for the month until the next PRO. The basis would fluctuate daily with the futures with the formula, FPC-Futures month ($CDN)= basis.

Because these contracts are not delivery contracts with specific timing of delivery (it's left to farmer's option when to assign deliveries to their PPO contract), the hedge positions are reversed based on the percentage sold of the whole pool account. That's why the PPO's are based off of the PRO. It ensures that there is no effect on the pool account with the pricing and payment options.

It does introduce this ‘readjustment’ when the PRO isn’t tracking the futures. It could occur in the opposite fashion as well if the futures were to be sliding and the PRO track it directly.

Tom

[AdamSmith]

To all the Agri-ville gang,

Isn't interesting how dropping the values of the fixed prices by $13.10/t on CWRS, $16.60/t on CPS and winter wheat and $20.75/t on barley is just a "readjustment".

While $10.49t (the benchmarking study???) is the CWB's new trophy number for the single desk premium.

So we don't dare touch the monopoly and cause a calamity the likes this country has never seen because of a hypothetical $10.49/t, yet we should just dismiss $13.10/t, $16.60/t and $20.75/t.

hmmm

1 1=9

yeah!

yeah! I'm figuring this thing out now!

NOT

[AdamSmith]

that should read 1 plus 1 = 9