DPC vs. FPC... CWB PRICES?

[TOM4CWB]

Charlie and Lee,

I note that today FPC was $287/t and was $308 for DPC for 1CWRS 13.5.

Isn't the Adjustment factor and Basis out of line on the FPC...?

The relatively small increase in the 100% EPO charge would a good indicator?

I note the Aussies cut their Barley pool of a couple of nights ago... clearly a requirement IF accountable management is on top of their marketing!

Is there any good reason or requirement for the CWB pools to be a certain length in time (ie Wheat 1 year long???

Wouldn't this fix the "Adjustment Factor" late sales issue on PPO contract deductions?

I know... how stupid could I be...?

[melvill]

Tom, I can't answer all of your questions. This isn't official Ab gov't policy but, personally, I'd like to see separate pools for each type of wheat and more than one pool per crop year. Or, as Charlie has suggested, why couldn't the Board go to only a FPC & a daily cash price.

Of course, I'm likely to get into trouble from many 60-year-old farm managers for suggesting multiple pools per year. That would make it hard to delivery product only at times when there isn't snow on the ground.

[charliep]

All good questions for the CWB.

Will note the daily price contract reflects an average of a select group of US northern tier markets while the fixed is a locked in relationship with the most PRO. The basis and the adjustment factor reflect the relationship with the PRO (including existing sales in the case of the adjustment factor). None of the above pricing processes reflect the actual value of the wheat the farmer is delivering to a customer.

Could they move to shorter pooling periods? They did it for feed barley without any consultation so I don't know why they couldn't do the same for wheat/malt barley.

[TOM4CWB]

Charlie,

When it comes to risk management... the CWB has us over a barrel.

Producer Direct Sales/ Daily Price Contracts (DPC) are a smoke screen... DPC's were not generally avaliable... are a bad immitation of US prices in any event... even if you won the lottery.

The system we have today for CWB risk management is as bad or worse than it was ten years ago!

$25/t to buy a PRO?

$32/t discount to feed wheat?

If I short US futures... say May 08... our grades are all messed up... No ability to arbitage US market at that time... it would be pure speculation on my part to do a CBOT, MGE, or KCBT hedge.

So I am limited to high price options!

Hardly worth it...

Backs to the POOL!

[wd9]

Any guesses as to whether to go with the PRO or do the FPC for HRS wheat?

[charliep]

wd9

My philosophy is to get paid for everything (including CWB grains) at time of delivery. My choice is FPC.

An afternoon of meetings so if my mind is warped, you'll have to forgive me. The question kinda reminds of the Wimpey words on Popeye (a couple of you other than me will remember) - "I'd gladly pay you Tuesday for a hamburger today".

Actually I will post the whole wikipedia descripiton of Whimpey. Reminds me of an organization.

Wimpy is Popeye's friend. In the cartoons he mainly plays the role of the "straight man" to Popeye's outbursts and wild antics. Wimpy is very intelligent, and well educated, but very lazy and gluttonous. Wimpy is also something of a scam artist and (especially in the newspaper cartoons) can be shockingly underhanded at times.

Wimpy loves to eat hamburgers, and is usually seen with one (e.g. in "Popeye the Sailor Meets Sindbad the Sailor," where he eats burgers almost the entire time) but is usually too cheap to pay for them. A recurring joke is Wimpy's attempts to con other patrons of the diner into buying him his lunch. Wimpy often tries to outwit fellow patrons with his convoluted logic. His famous line, which was first introduced to the cartoons in the 1934 cartoon We Aim to Please, is "I'd gladly pay you Tuesday for a hamburger today". Wimpy had other frequently used lines in the original comic strip, usually invoked to someone or a group of people who are after him for some shenanigan he's pulled. On some occasions, Wimpy tries to placate the angry person or mob by saying "I'd like to invite you over to my house for a duck dinner." The angry person or persons are usually satisfied with that line and Wimpy moves away quickly to a safe distance and yells, "You bring the ducks!" Another such line was, "Jones is my name... I'm one of the Jones boys"--an attempt to defuse a hostile situation with a falsified case for mistaken identity.