Missing the wheat bull again

[Zaphod]

I think I would avoid getting caught in the spread. If winter wheat crops look good in the US, EU and Ukraine, this market would have even more downside.

[melvill]

If the rules for the 08-09 crop-year are the same as for the 07-08 crop-year, producers can begin signing up tonnage for a CWB futures-first Dec basis contract. A futures-first contract locks in a U.S. wheat futures value and an exchange rate.

As for whether wheat producers should do that at this time of year, remember this: There are basically three risks that are part of that question -
1. futures price risk,
2. Canuck Buck risk - rising dollar, and
3. CWB basis risk.

If, as a producer, you can tie up two of those three risks through a futures-first basis contract, maybe, depending on one's analysis, that's a good thing.

Incidently, those are the same three risks that Canadian feedlots face and must deal with. However, it's not likely they would lock in a finished cattle futures and an exchange rate that far out since the cattle that would go to market in the fall of 08 haven't been placed on feed yet. Still, wheat producers aren't the only ones that need to analyse that potential situation.

[charliep]

They haven't updated the website yet but the futures first basis contract started Sept. 1 last year (as indicated by Lee). Clipped from the CWB site.

Wheat Basis Payment Contract – Start date - December 2007 futures only September 1, 2006 End date - CT November 1, 2007.

You are correct on your analysis of the spread/risk. One way of looking after margin risk but could backfire if 2007/08 wheat prices take off/everyone plants fence post to fence post wheat in 2008.

FPC stuff on CWB website at:

http://www.cwb.ca/public/en/farmers/producer/fixed/

Back to "Missing the wheat bull again".

[SASKFARMER3]

Today headline from England, With high wheat prices bread will have to go up but also meat because of the high cost of feed.
Price for top milling wheat $10.88 a Bushel Canadian in England.
But our CWB and Warbiton have a gentleman's Agreement Wink Wink Nudge Nudge.
Come on All this EPO PRO SHIT ETC is just a smoke Screen to make it look like their actually doing something for Western Canadian Farmers.
Does one CWB supporter actually think were going to get near $10.88 for their warbiton Contracts. HA.
Any one can come out and tell us that the PRO is $7.50 a bushel minus freight and an initial of $2.20 and wait and wait for the remainder here is some scraps oh we missed the market, excuse excuse and again another opportunity is missed. I for one have heard this same story for years and am getting really sick of it.
Another Bull missed.

[freenorth]

No matter how many pricing options the board has it still misses the point.

Here's an idea tell me what I'm going to get and when.

It is once again rediculous that we are at record futures prices and yet barely over $5/b.