CWB Fixed Price Contracts

[charliep]

Just a note to highlight the impact of the US wheat futures rally on FPC. 1CWRS 13.5 FPC was $228/t (vanc/st.law) versus the a 2001/02 PRO of $209/t and 2002/02 of $201/t (both port). With a $43/t basis, this would net $5/bu. Similar calculations nets about $4/bu for CPS.

1) Market are rallying so may want to play a bit but stay alert. I still don't like the current basis/logic behind it but it may be a time to eat an ugly basis to get a good price. The CWB will allow you to lock the converted futures price side in and let the basis float - may be worth considering if you think the CWB will improve their basis on the PRO.

2) For those that like to play the which crop year lotto, delivering against an old crop contract/putting wheat on a storage ticket and pricing into the new crop year/pricing out under an FPC right away is a good strategy. Still bullish the market? Maybe its time to buy calls.

[rain]

Charlie just about every grain company out their is offering some kind of trucking incentive as well. From $6.00-$13.00. Take that off your $43.00 basis and things are looking good.

Feed wheat down here is crowding in at $4.81 FOB bin. $5.00 is now the magic number around Calgary.

[charliep]

Lots of interesting choices for the last deliveries of wheat. We have been discussing 1CWRS 13.5 but may be worth delivering lower protein to non board (as long as you are over 85 % of CWB contracted values).

An interest note is that someone who have signed a May basis contract ($24.72 over) would be getting about $241/t basis port or $5.40/bu local price (based on $43/t CWB deduction). Current basis used in the FPC contracts is $11.62/t.