CWRS

[TOM4CWB]

AdamSmith;

Word has it that someone went on a month long "cruise" or Holiday, and got back about Wednesday... What a deal...

Someone sure is extracting a premium out of someone else!!!

Somehow, I have a nagging feeling that my farm is not going to come out of this "smelling like a rose"...

Astounding about covers off this week on Agriville...

THe Topic on CWB importing Black Sea grain.......being removed.......now really looks ... ........

But I guess it must.. have been ....just a ... computer..... glitch.......

Isn't it kind of suspicious that noone from Agri-ville even said anything about what happened?????

[rodbradshaw]

Tom4cwb
I am amazed that it was only a month that someone went on holidays considering that there is 6-7 people in the trading department at the CWB. Obviously we only need one as only one seems to be able to make a decision (right or wrong)from what we are being told.
This is the reason that we need to get the CWB out of a monoply position and let their agents go to work for their commission.

The next question to ask is,"Will their be staff laid off to control costs or is the total costs of operating the CWB to charged over the much smaller crop drastically reducing the final payment?"

[TOM4CWB]

Charlie;

I don't understand how you think the Pooling account can go up much further than the Sept PRO?

Since it is obvious the CWB has dropped the marketing ball this year...(by pricing most of the crop early) the only advatage the 90% pricing option could have is that if prices start diving, a floor price has been locked in that is above the initial price...

but if in fact the CWB has priced...

the down side is quite limited as well....


WOuldn't it be better to buy a call option that can actually rise next late winter/early spring when prices hitorically can be quite volitile again?

[TOM4CWB]

Rodbradshaw;

You wrote;

"The next question to ask is,"Will their be staff laid off to control costs or is the total costs of operating the CWB to charged over the much smaller crop drastically reducing the final payment?"

With the government of Canada's credit, and the Auditor General gone for good, what could the CWB do;

1. The CWB is builds the Contingency funds with terrible basis levels, and then covers off the Pool marketing blunders...

2. THe CWB extracts large sums of money from "designated area" grain producers who can't fill unpriced basis contracts... Like my neighbour who is being charged $20,000.00 on 1000t of basis he never even priced last year...

3. The CWB can excuse itself because of the Churning interest revenue.. and therefore feels no reason to be concerned about staffing costs of marketing blunders...

WITH all these reasons, won't the CWB just sail through these choppy waters, and not skip a beat?

[parsley]

AdamSmith,

Your story could be as true as warbles on yearlings. Years ago, the Saskatchewan Wheat Pool tried some fancy speculating on the exchange and they lost so badly, they had to come home and beg the Federal Government to bail them out. You don't learn a lesson when you get bailed out. The transactions will be traceable if they took place.

If they did..... The boys in the Twin City would smell blood when the CWB "trader" waltzed in, obviously out of his league, but mainly because he had nothing to lose. Farmer dollars would be hanging green from his ears, and he could care less if he took a beating. It wasn't his money and there's nobody accountable. The boys in Minneapolis will appreciate when the Wheat Board boys get up on the table and announce they're buying a US$1.50/bushel round for the entire trading house.

Parsley

[charliep]

Tom4cwb

I think that upcoming PRO forecasts have room to increase as well. My thinking is that there is at least some risk the CWB will over shoot one of PRO forecast this fall (I look at recent track record).

My over philosophy for all crops is show me the money by getting paid as soon as possible. For non board sales (all crops), I want to get paid at delivery - too much risk in recievables given the state of our industry. I would also use CWB tools to get as much of your money paid as possible of total payments.

Unless you signed a CWB basis contract there is no way to capture the recent rallies (the lessons learned from the April/May basis contract have been posted in my own shoulda/coulda/woulda file).

Taking current initial payments is an insult - derived from the crummiest PRO of the year.

I wouldn't deliver any wheat to the CWB outside of using the early pricing options - I want my money (or as much as possible) paid at delivery. Will the Sept., Oct. or Nov. PRO forecasts increase? Likely. I will recommend using the EPO then. You pick your delivery timing. The point is to use the tool to manage risk/increase cash flow.

[charliep]

Tom4cwb

I see your question on calls. Likely still a good investment. I might highlight the market has gone up awfully fast. I would be a bit patient and try to buy when the market is a little less hyper (less volatility) and perhaps come down a bit. I am cheap and hate to spend too much on these things.

[TOM4CWB]

Charlie;

The stats Canada report could be the last big push for the market... if the adjustments to stocks make the carry over numbers look really small... which the strength in the domestic market would indicate was the case this summer.

Buying a Mar. 03 Put could also be a good move... if the market moves up another $.50US/bu.

It is really doubtful that this rally is sustainable... big time memories of April 1996...

Isn't it amazing that the CWB wouldn't sell in 1996, when it would have been prudent... and in 2002 they sold a crop that didn't exist... at historical low prices...

Chaffmeister's point on sales timing is really worth looking into...

Charlie, have you every looked into the sales history of CWB sales timing, or has actual pre-pricing of grain only started in the last couple of years?

I understood when the commissioners ran the CWB they maintained a strict policy of pricing grain as it was loaded on the boats at port, so that the pool accurately reflected sales values that matched the volumes sold each week of the pooling year.

What exactly is CWB policy now?

[charliep]

Tom4cwb

No idea for the current time period but the CWB in the past used a number of forward contracting alternatives. All grain is priced prior to loading. In most cases, this would be at the date of the contract with the exception perhaps of customers who used basis contracts (these would have to be priced out prior to loading).

I agree with your comments about puts. Likely a better way to go in this market (noting the wild rise today). It will soon sort out speculators (people who believe they are smarter than the market and from personal experience often loose money) from business managers with a risk/profit focus (prices are profitable/historically high and look at alternatives to pocket them - usually profitable).

[AdamSmith]

This is a passage from the AgResource Daily Wheat Anaylsis Thurs. Sept.5.

"The CWB has been rumored to be large buyers of wheat futures in recent days covering long held short positions."

(This came off a fax copy so I couldn't cut and paste)

AgResource is a highly reputable grain market advisory service out of the United States. The real Wayne Gretzky of marketing.

[parsley]

Sohow much would they be losing when they're buying? $1.00-$1.50/bushel?

Parsley

[AdamSmith]

Anything more than a week would be more than $.70 USD.

anything more than one month would be over a dollar US per bushel.

if these hedges were put on any time before June 27 were looking at $1.50/bu plus.

$.7 US = $1.10 Cdn, $1.5 US =$2.3 Cdn