FPC on Durum

[lakenheath]

Would a guy be crazy to lock in durum at $10.97 less freight ($1.47 here) and net $9.50 a bushel for #1 13.0 Durum? When have we ever seen $9.50 durum? We all know the the PRO's are not written in stone. Could they go higher for durum? How much did the CWB sell at lower levels. If the PRO goes higher will it just come down in 6 months when the rallies are over?

Lots of questions to be asked and decisions to make.

Has anyone don a FPC on durum?

What is your take Charlie or Lee?

[melvill]

Here's my go. You're absolutely right. the PRO is only a forecast and nobody, but nobody, can make perfect forecasts. So here are the questions I think you should ask yourself:
1) How does $9.50/bu. compare to your per bushel cost of production which includes all cash costs, all fixed costs and your family living costs, which I use as a proxy for the amount you need to pay yourself for your labour and farm management skills?
2) How does $9.50/bu. compare to the previous historically high durum price?

I'm not at work so I can't answer #2 - maybe Charlie can. Unfortunately you're the only one that can answer #1, either.

But, given the extremely high durum PRO, I, personally think there is some risk that the prices won't stay there. I'm always worried when everyone, including market analysts, are so bullish they do themselves proud in a Spanish bull ring. So, if $9 and change is quite a bit above your total COP, what would be wrong with pricing a percentange, maybe 20% or 30% or 40% or even 50% on the fpc. That still leaves from 50% to 80% for the total pool payment roll-of-the-dice.

[melvill]

Another idea suggested by a colleague. Commit your durum to an 80% EPO. The premium is about 14 cents per bushel so the take home will slightly less than the FPC but you'll still be in the pool - comforting if there's still a little bit of a bull coursing through your veins. The 90% EPO is just too pricey to both with so 80% seems to be the way to go. The premium for the 90% EPO is about 46 or 47 cents/bu.

[melvill]

One more thing. I don't recommend signing up 100% of your durum for the EPo right away. The CWB recommends signing up what you intend to deliver in the next month or so. Board people tell me that they've had producers sign up 100% of their crop for the EPO and then have to pay the premium with no benefit to themselves. I agree with their recommendation. Now tom4cwb and parsley, put your claws back into your hands!! Grin.

[parsley]

Remind me when we have that beer to give you a good beating.

Parsley

[SASKFARMER3]

Laken if you have #1 Durum 13 protein load up the truck and head south. You will receive $12.51 dumped in the pit.
Your loosing over 3 dollars a bushel.
Three dollars a bushel.
You do the Math Melville.

[SASKFARMER3]

Melville the guy is loosing $3.00 who the hell gives a damb about historic prices etc.
Fact is simple we are loosing out on a once in a life time true price top thanks to a relic like the CWB.
45 Bushel crop x $3.00 loss on 750 acres is $101,250.00 extra would be in his pocket probably the shmuck wouldnt even need an operating next year if he could get the real value out of his crop.
Thats the FACTS.

[charliep]

Will leave the US price versus CWB payments alone.

Durum is a crop I would bin this year until at least late October. Lots more informatio will become available over the next month. Even if you miss the October 31 fpc deadline, you still have the alternative of an EPO all winter/spring and the premiums for this tool should come down (assuming the CWB doesn't cut them off).

Will also note the money in your pocket from a 100 % EPO isn't that much different from a FPC. PRO today (port) $12.03/bu. FPC - $10.97/bu. A 100 % EPO will put $10.86/bu (before CWB deductions) after you have paid the $1.17/bu premium with the benefit you can particpate in final payments above $12.03/bu.

[gjoost]

Personally I like the 100 % EPO, it's the best we have under our present marketing options.Works back to me at 9.53 fob farm. I know it is a pile of money to spend on a "put" option, but does allow upside. volatility is very high, so expect premiums to be high. If... Durum goes to (lets say $600/mt) I will participate at 41 dollars less.
If...durum goes to 350 dollars, at least I will participate at 441 (-premium). We have no idea what this flawed CWB will come out with next, therefore I am locking in a good profit.

[SASKFARMER3]

Charlie forget about the US price for a while NO!
The PRO is a smoke screen of CWB manipulation. Will we end up their, Ha I doubt it. Then their is the unrealistic programs FPC 2with a $1.00 discount etc.
The truth is their failing every farmer in Western Canada.

[melvill]

SASKFARMER3, there is another issue regarding stateside delivery of durum. A Canuck farmer has to find a place to deliver it. My understanding is that US elevators have to bin Canadian wheat separately from local grain. Apparently, many are not willing or able to do that, so they won't take delivery. The other alternative would be to deliver directly to a miller.

Anyone know anything more about delivering Cdn grain to US elevators or directly to US millers?

[lakenheath]

Lee,

They will buy from us today. Many farmers in this area have taken samples down there and they would buy it now if they could. They will buy durum graded as a 3 and 4 here (58 to 60 pounds) for a guaranteed number 1. Where the CGC gets off cutting a number #1 durum off at 63 lbs is beyond me. But that is a debate for another day.

[SASKFARMER3]

Melville They will buy what we have any day of the week, durum is Durum. And I have to Agree the CGC doesn't help Canadian farmers either. For years our grain has been probably graded the hardest any where in the world and for what premium. Ha the Frozen years of 02, 04 showed our farm how the CGC has no idea what produces a great final product. 100 cars of Heavy frozen wheat purchased locally and shipped to southern Ontario to a feed lot Wink Wink Wink.
Farmers have to wake up and see that the Canadian way works for every one else except the Farmer.