CWRS

[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