Target Price and over $6.75 for 3CWRS

[TOM4CWB]

The CWb will now offer a new service to farmers with the Basis Payment Contract. You can select a target price, and the CWB will monitor prices for you and lock you in if the market reaches your price.

Call 1-800-275-4292 for details.

Incidentally, if you selected a May/June basis of $24.72 (or April/May which was just slightly less) and locked in the Dec Futures of today at $293.81, that would give you a port price of $318.53. Minus deductions of $50/t made up of freight (say $35/t), elevation ($11.50/t) and cleaning (say $3.50/t) would give you a farmgate price of $268.53/t or $7.31/bu for #1CWRS 13.5.

If you delivered #3CWRS 13.5, you get the same values, less the spread between 1CWRS 13.5 and #3 CWRS 13.5, which is $19.80/t less. So for #3CWRS 13.5 you would receive $6.78/bu NET TO YOU within about 10 days after you settle with your local elevator .

Alberta values would be about $7-10/t or 20-25 cents per bushel better because of the lower freight rates in effect there compared to my example.

And this is delivering through the CWB, not to an elevator 100 miles away, across an international border, etc.

We know that not many people locked in the basis contract, so there aren't many who are capturing this, but it is possible.

If you have a basis contract, watch the futures and maybe this target price option is the best way for you to go. Ask for your price, cause with this market, anything can happen.

If your price isn't hit by the Dec futures, you can roll forward to Mar, may or July (they'll adjust your basis accordingly) or you will get a price assigned.

Tom

[AdamSmith]

I'm not trying to rain on your parade here thalpenny, but a program in which our only opportunity to lock in basis levels is before we know how much grain we will have to sell is not that great to begin with. The concept is good but the application of it is poor.

We are now seeing wheat sprouting in the swath, sprouting in the head in standing wheat, and shelling on the ground.

The last day of July to apply for basis contract is 60 days too late.

By the way the CWB's little readjustment on June 27 basicly closed the program down then. We had barely gotten the sprayers out of the fields at that time.

By the way if I didn't know any better your message could have passed for one that was coming from someone who was out competing for the opportunity to buy farmers grain.

Your proving to yourself that the CWB can do it. Good for you.

[AdamSmith]

sorry about that I should have said "60 days too early"

[AdamSmith]

Guess what Thalpenny if the CWB would free up the market> I would beable to do what you are talking about today or last june 30 which ever pleased me.

Do you understand freedom to market. If not try farming with a single desk seller.

[TOM4CWB]

Thalpenny,

Please tell me why the difference in the basis between the middle of June and the end of July?

Why exactly did the CWB need to take over $20/t away from us???

[TOM4CWB]

The basis is calculated as the PRO(less admin, risk, time value) minus the relevant Mpls futures in Cdn$ as of PRO day.

It is then set and does not fluctuate until the next PRO announcement. What does fluctuate is the futures value in Cdn dollars, every day.

The market started its rally just as the June PRO announcement came out. The PRO has since rallied, but at that time, it was simply to early to tell if the market rally was going to be long lived or short lived. As crop conditions continued to deteriorate in North America, it became clearer. Hindsight is perfect.

As the payment options are based off the PRO's, whether you had a fluctuating basis or a fluctuating futures price wouldn't matter - on PRO day there would have to be an adjustment. At times that the underlying futures and the PRO don't move in perfect tandem, there will be adjustment made on PRO day. IN the case this spring, the adjustment was quite dramatic and hence the concerns raised here.

But if you look at the past years, you'll find that the basis fluctuated between PRO days as well, just the market moves weren't enough to catch attention.

It's important to note that the total CWB risk deduction went up by only 5 cents per tonne with the June PRO. That was the only adjustment to the CWB deductions.

Tom

[TOM4CWB]

Thalpenny;

Your explanation doesn't give me any comfort at all.

Clearly I was told as we got closer to the DEC futures, the time and volitility factors become less, therefore the basis the CWB needs becomes less as the July PPO's close.

This was the case, except this year you widened the basis as the PPO's closed at the end of July, and then promptly narrowed them again in the August PRO.

Obviously you were forcing as much grain as possible into the 2001/02 crop year with these games with our livelyhoods, to make yourselves look better.

And what gives you the right to arbitarilly decide the market is wrong, widen the basis, at our cost?


YOU WERE WRONG... at both the end of June and July..., admit it.

The CWB monopoly single desk is supposed to be earning me a premium you tell me...

How come your "monopoly" just stole my premium and stuffed it in your contingency fund?