Just a note to get everyone to follow next Thurs. CWB pool return outlook. It will be an interesting one from a policy/signal standpoint.
The first note is the US wheat market has dropped off by about Cdn $20 to $25/t using the posted prices for the producer pricing options (can post the locations on the CWB site if some one requests).
Is the PRO simply a tally of wheat/barley that has been sold to date plus current futures prices plugged into the sales program? If this is the case, I would look for the next wheat PRO to drop by $10 to $20/t on Nov. 28.
Or are the prices more based on CWB pricing forecasts for the unpriced portion (what the CWB has sold is already there in both cases). I would look for the CWB PRO to be down in the neighborhood of zero to $10/t in this case.
The real interesting blend of prices going into the pricing pool remains:
1) How much was forward priced last spring?
2) Did the CWB take some steps to unload or replace these positions over the summer? Do they still have these positions on the books?
3) How much of the higher pricing opportunities in Sept./Oct. did the CWB capture by selling (either cash pricing or hedging)?
4) How much western Canadian wheat is still left unpriced in the pools? What is the CWB sales strategy given the information available on market outlook and likely farmer delivery patterns? Optimism around outlook has to be tempered by the inverse in the market/a likely more bearish situation next summer as a bigger world wheat crop starts to impact prices (assuming decent world weather).
Stay tuned.
The first note is the US wheat market has dropped off by about Cdn $20 to $25/t using the posted prices for the producer pricing options (can post the locations on the CWB site if some one requests).
Is the PRO simply a tally of wheat/barley that has been sold to date plus current futures prices plugged into the sales program? If this is the case, I would look for the next wheat PRO to drop by $10 to $20/t on Nov. 28.
Or are the prices more based on CWB pricing forecasts for the unpriced portion (what the CWB has sold is already there in both cases). I would look for the CWB PRO to be down in the neighborhood of zero to $10/t in this case.
The real interesting blend of prices going into the pricing pool remains:
1) How much was forward priced last spring?
2) Did the CWB take some steps to unload or replace these positions over the summer? Do they still have these positions on the books?
3) How much of the higher pricing opportunities in Sept./Oct. did the CWB capture by selling (either cash pricing or hedging)?
4) How much western Canadian wheat is still left unpriced in the pools? What is the CWB sales strategy given the information available on market outlook and likely farmer delivery patterns? Optimism around outlook has to be tempered by the inverse in the market/a likely more bearish situation next summer as a bigger world wheat crop starts to impact prices (assuming decent world weather).
Stay tuned.
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