Even though they are not available any more, it is interesting to re-visit what the PPO basis/fixed price might have offered on the August. Futures go where futures based on market conditions. The basis is something that needs to be examined however.
Mechanics.
Aug. 22 1CWRS 13.5 protein PRO - $259/t (port). http://www.cwb.ca/payments/pro/2002-03/082202.shtml
Converted Minneapolis futures price - $231.80
http://www.cwb.ca/corp/apps/ppo_prices.nsf/fixed_price/082202-mhrs.html
Deduction for risk, administration and time value of money - $3/t
Likely basis if CWB basis contract had been available - $24.20 over posted Dec. MGE price.
Basis levels offered off May, June and July PRO contracts (all over converted MGE Dec. futures) - $24.72/t, $11.39/t and $2.30/t.
Help? Can someone explain the above to me in terms of the basis. I have knowledge of what happened on the futures side.
Mechanics.
Aug. 22 1CWRS 13.5 protein PRO - $259/t (port). http://www.cwb.ca/payments/pro/2002-03/082202.shtml
Converted Minneapolis futures price - $231.80
http://www.cwb.ca/corp/apps/ppo_prices.nsf/fixed_price/082202-mhrs.html
Deduction for risk, administration and time value of money - $3/t
Likely basis if CWB basis contract had been available - $24.20 over posted Dec. MGE price.
Basis levels offered off May, June and July PRO contracts (all over converted MGE Dec. futures) - $24.72/t, $11.39/t and $2.30/t.
Help? Can someone explain the above to me in terms of the basis. I have knowledge of what happened on the futures side.
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