wheat buddy is out.

[farmaholic]

Larry should post a sample of his product to encourage subscriptions. People will likely need to be on blood pressure pills after they subscribe.

Prices will always be just high enough to keep you from going broke or keep you in the game. There's rooms full of people calculating your COP, you better hope you grow at least average crops to remain playing... both sides too, inputs and crop
prices. They know our business as good as us if not
better. You will be "lucky" enough to hit
the odd home run or grand slam but only afew in your career. Good luck.

[BTO_farmalll]

Dape',

Yes I Know How They are Calculating The Basis and xChange!!!!!! What You are Failing to Do is Explain WHY They Use Majic To Arrive at The CDN Price!!!!!!!! And While yer At It Explain The Straight Forward Math Used 2 Sell Us Fertilizer!!!!!!!

[bucket]

Let's all agree it's more important to forget the fact that the cumulative export price is 330 a tonne.

Then add in minor facts that the elevator system running at 50 percent capacity.

Sure it's the farmers fault they keep selling into an empty system with the graincos promising delivery 3 months after the fact. Sheesh.

[jdepape]

farmaholic:

Be careful what you ask for. Weber's Wheat Buddy isn't the gold standard you think it is.

- he presents the "posted basis" alongside his calculated "actual basis". Saying his calculated basis is the "actual" basis implies that the posted one isn't. The fact is they are each a basis - one has FX imbedded in it and one doesn't. One is just as relevant as the other.

- he says "all of them (graincos) are not using foreign exchange to compute basis levels". however, the way they are imbedding the FX in the basis is a long-standing convention of the trade in Eastern Canada where they have been dealing with buying grain in CAD and hedging in a futures in USD.

- he implies there is something terribly underhanded or illegal about it, saying "if ADM did this in the US, there would be more spooks and black SUV's than ADM employees in Decatur".

There is absolutely nothing wrong with the way they are doing it - here or in Ontario. It is widely accepted by all market participants in Ontario, farmers included.

In my view, Larry is simply fanning the flames of discontent among those that have yet to understand how it works and who see it as a way for graincos to rip them off.

I wonder how it would be explained if the CAD was at a premium to the US - making Larry's "actual basis" better than the "posted basis"? How do you explain grainco prices that are worse than they "actually" are?

[LWeber]

You ****ing hypocrite Depape.

Pipeline margins have gone from $25 to $32 dollars to $100.00 to $125.00.

Capture the carry on that.

While you defend it and the grain co's - the rest of the world is laughing at Canada - the same way they were before.

Did you or did you not try to sell your "expertise" to the CWB because they were hedging FX wrongly. Now the right way is not to include it at all.

The market is always right bullshit. ****ing grow up. Canola is inverted - basis is 30 under - yet the market is right...

Try selling your capture the carry stigma on that.

[LWeber]

Chaffmeister posted Oct 23, 2008 13:03
________________________________________
charlie brings up a good point. Impact of FX.

I also watch EPO discounts in the hopes it will shed some light on the mystery of CWB pricing.

Sept 26th:
Cdn dollar............1.0330 (0.9661)
CWRS 100% EPO disc....$48.00

Oct 22nd:
Cdn dollar............1.2533 (0.7969)
CWRS 100% EPO disc....$92.50

A weaker Cdn dollar strengthens price prospects in Cdn dollars, so I wonder what the EPO would have been if the exchange rate hadn't moved.

This might be simplistic analysis, but this EPO discount is telling me that the CWB figures the current market is about $100 below the current PRO.

Since we're about half way through the selling period for the crop year, I'm going to guess that the PRO should be down by $50/tonne.

But, for purely political reasons, I suspect the CWB will drop it by only $25 (or less).

[LWeber]

I’m happy I get to test a copyright infringement on your sorry ass.

[bucket]

When the open market started in 2012 the dollar was par and we had better prices than in the US. Today our prices should be alot better.

[MBgrower]

What ever happened to Chaffmeister? Wasnt he from South of Winnipeg somewheres?

[jdepape]

Larry - long time no talk.

Pipeline margins have gone from $25 to $32 dollars to $100.00 to $125.00.
<b>Oddly, it appears we are at least close to agreeing, but we seem to differ on what the problem is and how to solve it.</b>

While you defend it and the grain co's - the rest of the world is laughing at Canada - the same way they were before.
<b> Explaining it is quite different than defending it. And identifying the problem is the first step to fixing it. You talk about pipeline margins as if that's the problem (as opposed to the symptom). If larger than reasonable margins are the problem, what's the solution? (Sincere question.)</b>

Did you or did you not try to sell your "expertise" to the CWB because they were hedging FX wrongly.
<b>I introduced a world class FX trader (from Monaco) to the CWB - thought he could help. You and I both were saying they were getting it wrong, remember? You even wrote here on Agriville how the Aussies were doing it right and the CWB was losing gobs of money cuz they were doing it wrong, remember?</b>

Now the right way is not to include it at all.
<b>I'm quite frankly surprised that you don't know how/what they're doing.</b>

The market is always right bullshit.
<b>When a farmer sells his wheat at 100 under - or 200 under - and the buyer accepts it, THAT's the market. That's not to say it's perfect.</b>

****ing grow up. Canola is inverted - basis is 30 under - yet the market is right...
<b>Another one we agree on. The cash market (basis) is doing exactly what you would expect - under the circumstances. The problem is in the way railcars are allocated (and rationed) and it all stems from last year's debacle. Just one more factor to consider in the whole rail transportation screw up. I've written about it here on another thread and given my input to ICE on what needs to be done. Have you?</b>

Try selling your capture the carry stigma on that.
<b>Stigma? Really? Disgrace? Quite the contrary.

I seem to have touched a nerve. Sorry. But if we are going to solve the many problems in this industry, those of us that want a functioning market better start getting on the same page. Hope you're with us on that.</b>

[bucket]

Depape

So you agree that the open market was poorly implemented?

Seems like quite a few things to fix.

[jdepape]

MBGrower

Chaffmeister was me and I was he.

I used that name back in the day when I had to be careful about sharing my opinions.

It appears that maybe we still need to be careful....Pity.

[bucket]

Also so you also agree the true basis is 100 - 200 under?

As opposed to what graincos present as a positive basis. Or something narrower?

[jdepape]

bucket:
I've described ending the single desk was like pulling a tree out of the ground, roots and all. A lot of heavy lifting but it left a hole. There's work to be done to fill it in and create a level playing field.

We're not there yet.

[jdepape]

Basis is simply the difference between futures and cash.

Period.

It is NOT a cost.
Graincos do not buy your grain at "whatever under" and sell it for futures price.

Basis is a price (or a component of price, if you prefer).

On wheat in western Canada, you can look at it a number of ways:

1. Convert the futures to CAD, then deduct the CAD cash price.
Basis in CAD.

2. Convert the CAD cash price to US, and deduct from futures (in USD). Basis in USD.

3. Take the Cash price in CAD and deduct futures (in USD).
Basis is neither USD or CAD - it holds the FX conversion.

Each of them is right (so I won't say your 100 under is the "true" basis). I have been stressing that the way the graincos do it (#3) shouldn't be vilified. It works and it in no way hides anything from you. It is a superior way to manage a hedge book.

For what it's worth, I track basis using #2 and #3.