Port Position HRW/HRS Wheat Basis

[TOM4CWB]

Dear Charlie and Lee,

I was studying the US port basis with interest... US Wheat just updated the basis report... with VERY interesting numbers
@http://www.uswheat.org/justReleased/doc/9856929F800860ED85257372006C14CA/$File/PR071012.pdf?OpenElement#

Generally speaking... the basis (above the futures) has gone right through the roof (particularily for the PNW)since the middle of June... has gone from $.36/bu to $1.32 on HRW and $.96 to $1.60/bu for HRS @ PNW Ports.

On Page 3 of the Oct 12/07 weekly price report:

07 Basis OVER futures HRW

01Feb 27Feb
$1.10 $.80 PNW

27Feb
$.80 Gulf

April
$1.10 PNW $.86 Gulf

June
$.36 PNW $.36 Gulf

Oct
$1.32 PNW $.93 Gulf


07 Basis OVER futures HRS

June
$.96 PNW $.70 Gulf GLakes $.30

Oct
$1.60 PNW $1.56 Gulf G Lakes $.58

From my read on this... for those who held/hold futures only pricings with the CWB... this should have been particularily GOOD news! Better N.A. Basis at port position MUCH BETTER this October!

WHat HAPPENED to our CWB FPC Basis?

Worst in History by a long shot!

Have I got this all wrong?

[charliep]

No answer to your question except to highlight the above relates to actual cash prices and the CWB basis adjustment relates to relationship between the pooled price and the producer pricing options.

Perhaps relates to mustardmans definition of the difference between a marketer and a seller. A marketer would be aware of cash premiums/basis and sell to the highest priced market through supply chain partners that work with them. A seller has no concept of the market and simply delivers to the most convenient location without any awareness or desire to know about prices. If they are using the producer pricing options, they don't seem to care about the money that is being captured through this process to be deposited in the contingency fund or redistibuted through pooling system. Perhaps mustardman doesn't use the producer pricing options and is quite happy to have his payments increased through a profit generating activity like the producer pricing options.

[TOM4CWB]

Dear Charlie,

When I signed my 'Futures Only' pricing contract with the CWB... I had a contract that said they would charge me "Cost" for doing my business.

In past years... if the cash port price increased... the basis did get better!

Now it certainly appears the CWB is not turning over the value in the market to "designated area" growers on either the basis, the Adjustment Factor, the Feed wheat Adjustment,PPO Contracts... the CWB appears to take every opportunity to distort true market signals!

When I compare with Canola I priced this week... at well over $11/bu for April delivery... $-20/t basis off a $466/t May futures... Plus scads of IP bonus and freight payments... How can anyone tell me the CWB is doing a good job!

ANd look at US Canola prices in comparison... much lower than in Canada... WITHOUT the CWB in Canola marketing! What makes any sane person believe it would be any different for wheat?

On top Canola grading actually extracts a premium for my farm... instead of the end user! CWB grading through the CGC is simply awful!!!

We should be using Hagberg Falling Numbers to grade our wheat... instead of depending on this visual garbage... Internationally it is the standard for determining true milling quality...and it does work... it has, for decades!

We are getting so RIPPED off by our "Designated Area" Marketing and Grading system... Look at Ontario for just a milli-second!

It is unbelievable that so many will do so little to protect themselves from a boogeyman and fear; that are not at all based in reality!

We are being taken to the cleaners... processed... and stripped of our value... by the very system that many believed was supposed to prevent this from happening in the FIRST PLACE.

WHAT A MESS.

"Designated Area" grain growers need to wake up.

[TOM4CWB]

Charlie,

So the Conversaton with the elderly fella about the CWB at the meeting on Thursday... ended somewhat like this!

I explained that Cash flow was avaliable through advances. He said their farm never took advances. Didn't need them. They do it all cash. Don't buy new equipment... only "fools" buy new equipment and go in debt.

Every thing works fine exactly the way it is!

He was very proud of the $3M farm he had turned over to his boys...

I asked what was so wrong with investing in our CDN econmy... spending some of that $$$ along the way... and mentioned I didn't think he could take anything with him when he died!

He just grinned... smiled a big smile... and agreed!

I don't think I had any chance to change his mind... all we can do is hope folks will open their minds just a crack.. to let a little light in... and trust some day folks that are not so emotionally attached will open that door a little wider!

Thanks to you Charlie... and Lee... for your work and help in letting the LIGHT SHINE in just a little more!

God bless You... and God Bless Canada!

[crusher]

I'm surprised basis would be improving at the same time futures have been skyrocketing. Almost seems like a typo. My past experience with PPO's has been an inverse relationship between futures and basis (futures improving- basis tanking). I know your pain on the futures only contracts, been there done that. At least you don't have the adjustment factor.

[TOM4CWB]

Crusher,

The wheat market is HOT.

14%DNS Great Lakes = $9.28/bu

14%DNS PNW = $10.30/bu

HRW Ord. PNW = $10.03
HRW 11.5 PNW = $10.08

SW PNW = $10.65
SW 8.5 PNW = $11.10

The reason Montana prices are;

Montana (Great Falls) Dark Northern Spring Wheat #1 (13.5%): $322.90 /tonne (Canadian) or $8.78/bu;

(http://www.agric.gov.ab.ca/app21/grainprices [Oct 12/07 grain prices])

Is because end users are paying up for wheat!

And the CWB thinks a Vancouver port price of 1CWRS 13.5 = $307.56 (DPC) is fair?

$70/t below Fair market value?