Why So Many Farmers Miss the Wheat Board

[foragefarmer]

Mbdog

Your make a good point, but be careful as you are talking through to sides of your mouth.

You can't say you like the open market in one sentence and in the next sentence state you don't like the way the basis operates. I realize that you were unfortunately on the wrong side of the basis, just recently, and it left a bitter taste (which we have have been at one time or another)but you now have to live within the new wheat market reality. This is how the game will be played going forward.

[mbdog]

Forage...could be interpreted that way, but not my intent. Thought I qualified my point by saying its a function of competition, which likely/hopefully increases through time.

[charliep]

For what is worth, just looking at the historical basis charts for the 2004 to 2009 CWB fixed price contract. The basis variability over this period was any where from about $20 under (center Saskatchewan) to in excess of $80 under).

Perhaps my other comment that has gone no where is that wheat is substantially different crop in terms of basis variability/volatility for crops with futures. I heard the expression. Corn is corn. Soybeans are soybeans. One grade. Same here in western Canada with barley and canola.

Wheat is not wheat. Wheat has multiple grains, quality, protein and other attributes that vary with weather in the growing season and other factors. The deliverable grade on US futures markets reflects a very basic wheat quality. Your basis reflects how the market is valuing quality characturistics. You can add in the US markets include currency, a larger domestic market, etc. that are not the same in Canada.

Never does any good/ignored but I will put the link in for Montana basis levels. They vary a lot as well. Impact in the US is they are more likely to do forward pricing with other crops/leave wheat unpriced.

[URL="http://wbc.agr.mt.gov/wbc/Producers/Pricing.html"]Great Falls[/URL]

All these issues existed in the single desk days. Farmers didn't have to deal with them/they were hidden in the pooling process.

[blackpowder]

Charlie. Yuuuup.

[mbdog]

Charlie...funny..I was at a few grainco meetings and they say wheat is wheat
Whatever, doesn't matter.
My point was directed towards the new definition/rules regarding basis. I'll use it cause you sited it...5 year basis range of 100$...this I can buy...my point is 150$ in 4 months. Hope that doesn't happen very often.
Not arguing with anyone, just pointing it out and leaving it there.

[charliep]

Perhaps the fact we went into an inverse/premium market on the December MGEX in the delivery month is telling. The spring wheat market is different today than six months ago. Hear you. My only comment is to try to find supply chain partners that are at the front end of taking advantage of the changes.