Wheat! why our price is low.

[jdepape]

bucket: "Just to be clear, if the basis of plus 3 cents has the fx in it, it's a pretty strange calculation"

How so? I think you are assuming that with the CAD where it is right now, applying it to the futures price (through the basis), you should get a much higher CAD price. Yes? IF so, you're missing the point - you aren't converting the futures price - just the cash price.

Try this:

As a trader, take the fob Van price you want (in USD). (At what price would you want to own wheat, given the export prices and any potential logistics issues that you fear.)

Convert that USD price to CAD.

Deduct all your freight etc (in CAD) - results in a flat country price in CAD.

Deduct the current futures (in USD) and the difference is your basis - with the FX imbedded in it.

[bucket]

Or look at Northern tier states pricing. It should be close to the same.

[jdepape]

Not necessarily.

If they had the freight debacle that we had last year, but our system was humming along, our basis should be better than theirs. It's a relative thing.

Unfortunately, Canadian buyers are being very cautious right now, not wanting to put anything on the books without "protection" from possible freight mishaps. They aren't charging for vessel demurrage in the basis, they are charging for the RISK of vessel demurrage.

[bucket]

Interesting that now a farmer can't use a basket of northern tier states elevators to compare prices to when that is exactly what informa did when studying the open market here.

And have basis levels come down from 55.8o a tonne for wheat as reported in an informa study since the open market. ?

Considering that canola was at 45 a tonne as a basis to compare to when the study was done?