DPC $9.26 Saskatchewan!

[charliep]

Hate it when I become the CWB representitive (even on the technical side).

To both. The DPC is not a cash price. It is a survey of northern tier US states (precise locations not disclosed) adjusted (likely by a freight factor deduction) back to a central Saskatchewan elevator and finally converted to Vancouver. When you get paid, the price is Vancouver minus deductions (including rail freight). Implications are a Peace River farmer could have a better price than you do sask3 inspite of the fact you are closer to US elevators who ship to the milling market in Minneapolis - not Portland. The CWB has already told us they are taking an extra $5/tonne off to handle risk but could be more.

tom4cwb - Have not heard anything about restrictions on the FPC other than the CWB requests to get all wheat possible signed on the "B" series. My sense the CWB is very aware of the inverse and are likely to force farmers who are contracted to delivery winter/early spring versus summer. Realizing again we don't even know what happened to the contingency fund in 2006/07, volatile markets like 2007/08 are going to present extreme challenges for the CWB both in terms of futures and basis. The obvious answer would be for the CWB to go to direct cash pricing but the board of directors is not there (look at the fight going over malt barley).

[Hermes]

C contract???? Charlie is this true???
Charlie are you telling me, in a market screaming for Wheat, the CWB can't sell out a c contract?
Another example of how incompetent these fools are!!!!

[NDHAWK]

They could sell out a C contract,but not at a price loss to the A/B. HRS has a $2.30(fri dec 14) old crop-new crop inverse.There would be plenty of whining if they took a significant tonnage and the result lowered the total returns of the pool. The CWB will do everything possible to make the pooling option look good this year,but even the stauchest of CWB supporters are doubting they can match what is being offered today at any and every elevator in the USA.
Time for a change,everything/everybody becomes outdated and obselete at some point in time- it is just hard to admit your time has passed.

[charliep]

I likely agree with the CWB comments/potential decision not to take wheat on the "C" series. Given the inverse in the market (there for everyone to see today), there is too much risk for the pricing pools.

What is needed is some other tools to allow delivery at the end of the crop year and a price that reflects the market then. Could be a separate pool. Could be a producer pricing option for the summer. Could be cash pricing.

[wmoebis]

I have often thought of this. Would a pool that is ended biannualy, triannualy, quarterly or even monthly be possable and feasable.

would our infrastucture be able to cost effectively and physically, handle this. Would the farmers, the grain companies, the railroads be able to clear the system to make these changes. Would the cost of managing this system at the farm, the handling system, the marketing system off set any extra possable profits? What would be the impact to our buyers?

[charliep]

Just curious why the system would have to clear the system? There are processes the CWB uses now to value inventory between pooling years. Why couldn't they be applies to multiple pooling periods? What may be needed is contracting systems that provide for the requirements of customers for supply commitment. That will mean medium term contracting programs with individual farmers for a specific customer supply needs.

The only other question is how CWB costs are allocated. The cost allocation between between the A and B feed barley pool is weird to say the least (see last 2 years annual reports) and would hate to see repeated in any wheat multiple pooling periods.

My question to you is whether you see an opportunity for cash pricing? I assume you are familiar with the discussion around cash pricing for malt barley. Which one of the two extremes would you favor for wheat?

[wmoebis]

By clearing the system I don't speak of physically clearing commodities I speak of the legal, financial and administration aspects.
The way our system is working now would not work, as we seem to be always waiting for the books at the board level to be adjusted then waiting for the minister to Okay payments etc. In the mean time many farmers are operating on borrowed money or having to make financial adjustments while waiting in anticipation. Which is, an added cost to the system, as we the producers are part of the system and have to be factored in.

[charliep]

The present system for allocating costs is cumbersome to say the least. Why wouldn't the CWB estimate these costs and come up with a value that would apply to all pooling periods? Payments could be made to farmers a month or two after the pool closes based on these costs. Any profit or lost from this aspect of pooling would go into the contingency (similar to what they do today for the producer pricing options).

[charliep]

You also could be referring to the taking of inventory and settling of books between the different pooling periods. Would this be bad from a farmer standpoint? I would hope the CWB and grain companies take this process seriously already on monthly basis from a risk management standpoint (both price and inventory).

You also could be referring to the cost of sending out payments etc. I assume with shorter pooling periods, the CWB/federal government be more aggressive on initial payments. Similarly, the CWB would not issue adjustment payments as often and this would reduce this administrative expense. I note the decision was made to combine the interim and final payments for 2006/07 for this very reason.

[wmoebis]

I agree with your thoughts. One of my concerns in the presant system is the need for the board of directors whom are appointed and trusted by the minister and elected by we producers, to have to go back to the gov't for authority to pass our moneys back to us. Which of late has taken far too long.

I speak of the pool accounts only, as I realize there are other options in place for price and risk management.

For me as a producer risk management goes beyond finacial and marketing management. There is storage management of commodities to preserve quality and infestation. Grain that I may want to hold to the third quarter has to be handled differently than that sold in the first. This adds extra financial burden and must be reflected in the financial gains. Financial commitments could be more accurately timed, to coincide with chosen markets and payments.