Mid Month PRO

[charliep]

More embarrassment - maybe I should have made that second pot of coffee.

The $3/t under in the high protein alternative refers to 2CWRS 13.5 protein PRO.

The $157 above refers to the winter crop insurance value for the low protein option.

I am leaving the house before I make more mistakes. Sorry about that.

[charliep]

More embarrassment - maybe I should have made that second pot of coffee.

The $3/t under in the high protein alternative refers to 2CWRS 13.5 protein PRO.

The $157 above refers to the winter crop insurance value for the low protein option.

I am leaving the house before I make more mistakes. Sorry about that.

[TOM4CWB]

Charlie,

I am having a problem relating to CWB numbers in the PRO.

1. Has the CWB presold more in one class/grade of wheat that will affect the spreads between the grades, protiens, and classes of non-durum wheats in this pool?

2. I look at real functional value of wheat in the market place, and the CWB/CGC grading system that rejects perfectly functional milling wheat because it has a very small amount of a specific US variety in the sample as insane from a commercial functional point of view. Obviously as you have stated the US wheat HRW and DNS harvested in the last 2 months is of very high quality and protien, blowing CWB "premium quality" Canadian premiums out of existance. Now artifical grade/class/protien spreads are the reality, and not market signals of what our wheats are really worth.

3. If we are to look at the real world, PNW prices at August 9, this is where we are at:

US Wheat associates report;

Hard Red Winter (CPS),
Ordinary; $274/t
11% Protien $274/t
12% Protien $274/t
13% Protien $275/t

Dark Northern Spring (CWRS),

DNS (300 falling # or better)14% Protien $270/t
DNS 15% Protien $275/t

Is is painfully obvious with the short crop of wheat in both the US and Canada, that the CWB PRO numbers bear little resemblence to the cash market and real value of our wheat.

The pooling accounts further distort everything and make figureing out what the CWB has done or what they are doing near impossible.

Relating this all back to crop insurance then just adds fog to an already impossible market signal situation.

It is painfully obvious that we must have cash price signals, to determine real values, and I suspect CWB sales people skew the whole process because the PRO protien and class spread figures become self fulfilling, the CWB needs to create credibility in PRO numbers and spreads, so they in turn sell the grain on those spreads.

Customers will often time humor a salesman who wants to give a good deal on a product that is worth more than what the salesman believes, or knows.

A crutial election of the new CWB CEO is coming up before the end of this month, it may tell the story on whether or not the CWB wants to join the 21st century...

[TOM4CWB]

Charlie,

Sorry, I should have mentioned how I came up with these numbers;

C$ at 1.58

US Wheat associates August 9 week price report, HRW to 13% $4.72US $4.74US/14Pro;

DNS 14pro (equivelent to 13.5 CWRS) $4.65US; DNS 15pro $4.74US

In late May early June the CWB was saying that these prices could not happen, and this is why we now have a problem.

Also did you notice the draw down in wheat stocks?

This was obviously the wrong thing to do, yet for some reason when prices are low, the CWB draws down stocks, and then builds them up when prices are high.

Only in Canada you say; It is a PITTY.

[TOM4CWB]

Just for those who are interested in good price reporting the US Wheat site is;

http://www.uswheat.org/

On the RH side the site does weekly price reports, with archives for those who want to go back and see what happened, on a weekly basis.

Charlie,

If we take a $60/t basis off the PNW cash prices, which I know is high, that leaves no question that prices are all way over 10% above CWB/Ag Canada projections done in December of 2001.

[charliep]

Tom4cwb

Question 1 - Timing of sales of different classes/qualities impacts overall returns - it does impact overall CWB pool returns. Spreads are based on average relationships between different classes over the crop year - supposed to remove timing of sales as an influence. This area is very complicated and likely something farm managers should know about. A good discussion for this winter.

Question 2 - Will leave alone except to comment that buyers have particular needs/quality characturistics. Depending on what is in the contract, there could be liability issues. Should farmers/grain companies who deliver unliscenced varieties be accountantable for this?

Question 3 - protein premuims are narrower. How this scenario plays out during the winter will be interesting.

General - I don't have an intimate look at the CWB sales plan/what is on the books/priced. These are questions for the CWB.