Thalpenny;
I find it interesting that the CWB equates the EPO to an option, but it is in no uncertain terms equivelent.
If I could sell the cash wheat today, and buy back a call, the actual market response on my call option is totally different than the CWB pooling account.
If I buy a March call option, and the price rockets up in Jannuary, I recieve 100% of the market increase.
With the CWB pooling account, I would assume by January 2003 only about half or less of the 2002/03 crop will be left to sell, and this will stop the price from rising by at least one half of the value, and if the CWB has significant sales booked even less.
Kasro is right on the Portland and Minneapolis cash prices, they are not FOB in a boat, they are quoted FOB if they are FOB, and I always quote in store prices to get equivelent to Vancouver BC CWB in store quoted prices.
Admit it Thalpenny;
The CWB has only come less than 5% of the way to offering reasonable marketing services to commercial wheat and barley farmers...
By the way, if the CWB does buy call or put options, to cover EPO risk, and since the futures market/options will profit the CWB at least twice what the pool can react, do you put the extra profits in the pooling accounts or in the contingency fund for EPO contracts farmers paid this risk management premium for?
I find it interesting that the CWB equates the EPO to an option, but it is in no uncertain terms equivelent.
If I could sell the cash wheat today, and buy back a call, the actual market response on my call option is totally different than the CWB pooling account.
If I buy a March call option, and the price rockets up in Jannuary, I recieve 100% of the market increase.
With the CWB pooling account, I would assume by January 2003 only about half or less of the 2002/03 crop will be left to sell, and this will stop the price from rising by at least one half of the value, and if the CWB has significant sales booked even less.
Kasro is right on the Portland and Minneapolis cash prices, they are not FOB in a boat, they are quoted FOB if they are FOB, and I always quote in store prices to get equivelent to Vancouver BC CWB in store quoted prices.
Admit it Thalpenny;
The CWB has only come less than 5% of the way to offering reasonable marketing services to commercial wheat and barley farmers...
By the way, if the CWB does buy call or put options, to cover EPO risk, and since the futures market/options will profit the CWB at least twice what the pool can react, do you put the extra profits in the pooling accounts or in the contingency fund for EPO contracts farmers paid this risk management premium for?
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