Dear Charlie et el,
The Fixed Price Contract basis the CWB assigned to us this past fall... in the August to October 07 time period... appears to be a logical reason to assume that the CWB risk management dept. for PPO's does not work in a reasonable manner a normal person should expect from a world class marketer.
In 2002-03, with a huge and massive credit from hedges I had implemented on sales through PPO contracts... the CWB insisted I was not allowed to use the credit these hedges should have created... because the CWB pools all PPO hedges with its own pool account hedges.
The long and short of it was that If I had a hedge worth $40/t... that position could have been lifted 6 months previous... at a $40/t loss... therefore I was not entitled to the credit... or to even lift my hedge with no compensation at all.
This practice of pooling PPO hedges... leads to a logical assumption... that if a position is not maintained, to cover the position created with my PPO contract... the CWB pool is at risk.
THis then takes us to a reasonable assumption... that the CWB managers are taking these losses out of the basis... at my expense.
In the past... if the basis on shipments got better... the CWB past the narrower basis on to us. Not so this year. We are short close to $60/t. The only reasonable excuse the CWB would have to expropriate this large amount from PPO FPC holders... is because the CWB lost the value of the hedge at some point.
The other alternative (that they are simply stealing our money) is hard to fathom... but I suppose is an alternative?
THe basis system that is now in place effectively means only CWB pooling is an effective marketing tool... and PPO contracts are neither reliable or reasonable to use.
This has caused the stress on the CWB to be lifted in many cases... because those folks ("designated area" growers") that understand what is happening with CWB "risk management" PPO tools... will not use them.
Problem solved.
Correct me if I am wrong, please!
The Fixed Price Contract basis the CWB assigned to us this past fall... in the August to October 07 time period... appears to be a logical reason to assume that the CWB risk management dept. for PPO's does not work in a reasonable manner a normal person should expect from a world class marketer.
In 2002-03, with a huge and massive credit from hedges I had implemented on sales through PPO contracts... the CWB insisted I was not allowed to use the credit these hedges should have created... because the CWB pools all PPO hedges with its own pool account hedges.
The long and short of it was that If I had a hedge worth $40/t... that position could have been lifted 6 months previous... at a $40/t loss... therefore I was not entitled to the credit... or to even lift my hedge with no compensation at all.
This practice of pooling PPO hedges... leads to a logical assumption... that if a position is not maintained, to cover the position created with my PPO contract... the CWB pool is at risk.
THis then takes us to a reasonable assumption... that the CWB managers are taking these losses out of the basis... at my expense.
In the past... if the basis on shipments got better... the CWB past the narrower basis on to us. Not so this year. We are short close to $60/t. The only reasonable excuse the CWB would have to expropriate this large amount from PPO FPC holders... is because the CWB lost the value of the hedge at some point.
The other alternative (that they are simply stealing our money) is hard to fathom... but I suppose is an alternative?
THe basis system that is now in place effectively means only CWB pooling is an effective marketing tool... and PPO contracts are neither reliable or reasonable to use.
This has caused the stress on the CWB to be lifted in many cases... because those folks ("designated area" growers") that understand what is happening with CWB "risk management" PPO tools... will not use them.
Problem solved.
Correct me if I am wrong, please!