Premiums/CWB Early Pricing Option

[charliep]

Just a note to highlight the premiums are coming down on the early pricing (opportunity to lock 90 % of pool return outlook) as the MGE/other US wheat futures rally. Something to follow to keep the cost of this risk management strategy as low as possible.

What are the alternatives for EPO contracts prior to and after delivery?

[TOM4CWB]

I am curious to know why there is a higher risk charge for CWES than there is for CWRS.

The CWB is already discounting CWES $32/t, why would they need to charge more ($10.25/t) on CWES than CWRS($9.25/t) when they already have basis difference (more than is fair by far) extracted from us to begin with.

The CWB fails to pay reasonable protein spreads on CWES (with only one protien break at 12.5%), when in Eastern Canada they treat Extra Strong as Hard Red Spring.

As there is not a significant difference in gluten strength (blending with appropriate HRS averages CWES easily to acceptable tolerances) is it not unfair that I am discounted so deeply for high quality CWES?

Here are the CGC mixing time testing procedures:




Alveogram

For all classes with the exception of CWAD, ICC Standard Method No. 121 is followed, using the constant pressure Chopin Alveograph Model MA82. Total mixing time is modified depending on wheat class as follows: CWES 8 min; CWRS 7.5 min; CWRW 7 min; CPSR, and CPSW 6.5 min; and CWSWS and CEWW 6 min. Chopin standard procedure using a Chopin Alveograph NG is followed for CWAD. Total mixing time is 8 min. Following milling, flour samples are stored for a minimum of seven days prior to analysis.

Charlie;

So what real justification does the CWB have… in discounting CWES, other than to create an artificial market signal which stops farmers from growing CWES?

[charliep]

Why does CWES have a higher discount/premium expense - no idea. Other wheat classes are more expensive yet. Should reflect risk.

I checked into mechanics of EPO contracts. Best way is to apply for the EPO ahead of delivery. See CWB site. At the time you sign the contract, you can lock in your EPO premium or you can let it ride till the time of delivery. Last day for the EPO is Nov.29 so if you haven't established already, it will be done for you on this date at the discount/premium of the day. My assumption is that you can phone in (with your contract number) an book an EPO premium prior to delivery if you want (assuming you didn't do it at contract signing). The concept is to keep the cost of the premium down.

Make sure you let the elevator know you are delivering against an EPO contract and the contract number.

You can set up an EPO contract after delivery but you have to either get the elevator company or the CWB directly to find the original cash ticket number, cancel it and have them issue a new one with the EPO contract number on it.