Things to watch this week.

[charliep]

What things will you be watching this week?

My eyes will continue to be on wheat futures. Markets very rarely go straight up the way these ones have (look at a chart) without some form of correction. I suspect some have made lots of money on this rally and will want to bank some of it at some point. If they do and the impact of the expanded trading limits kicks in, wheat futures prices could be in for a wild ride.

Thoughts on the producer pricing options/where the PRO/basis will be on February 25? An interesting comment is I doubt the CWB would have sold this rally in the past unless it was backed up by commercial business. You as a farmer can look at the price and say this is quite acceptable for a portion of your crop/sign a futures only contract. A big change for both how you and the CWB manage risk.

No one is commenting so will highlight again that at least one company is offering the CWB malt barley CashPlus program. It may be the only game in town so up your knowledge level on the program. A change that seems to have occurred is the price you are offered as a farmer will have a direct relationship with the price the selector pays the CWB. Your chosen malt barley partner should be able to share their price to the CWB.

[charliep]

Just checked MGE. Limit up March/down hard new crop. Ouch.

[bucket]

charliep

if you sign the futures portion of the fpc what do you think the basis will be come the end of feb?

[charliep]

Absolutely no idea on basis. May be worth waiting the two weeks. Having said that, at todays price, you can eat a wide basis and still have a good price. Observation over time would tell us CWB basis levels get weaker in rising markets and stronger in following markets. If you assume the todays prices will not last forever, a strategy would be to not panic if the CWB offers an ugly basis at grain world and be patient into the spring/summer.

Should correct myself when I suggest the market sometimes corrects and change to the market always corrects. Will it be at $15/bu on the May MGE or $18/bu or $24/bu or $36/bu? No idea.

The CWB historical charts are updated this AM.

http://www.cwb.ca/public/en/farmers/producer/historical/pdf/2007-08/0708dpccharts.pdf

http://www.cwb.ca/public/en/farmers/producer/historical/pdf/2008-09/0809bpccharts.pdf

[kryger]

I have been keeping an eye on Dec. new crop. As of last friday Feb 8, futures is at $11.39/bushel. I don't know what the basis would beat, but took .68 cents($25/Tonne) to be on the safe side. Take off handling and transport to coast. In my case that is $1.48/bushel. Net to me for #1 Wheat 13.5% protein is $9.23/bushel. Not a bad starting point.

2 years ago, the basis started at about positive $18/tonne and last year it was around $6/tonne positive.

The basis is the wild card, and I don't know why we have to wait so long to get basis numbers.

How many farmers are going to hang back to see if they can get in on the lottery and snag a DPC contract. It doesn't come out until June sometime, and how many tonnes are being offered.

The CWB pricing programs does not require a lot of skill to use, but we do need a lot of luck to use them properly, lots of guess work. They were probably designed that way.

[chaffmeister]

Anyone looking at using options, now that we're in lofty price territory? Used to be that options were considered so expensive that they really cut into profit margins. Depending on what happens to input costs, seems options might be a good way to protect a reasonable profit, not just break-even.

Thoughts?

[charliep]

An interesting week so far with most wheat markets down excepting the front end of MGE (mainly March although May held up well yesterday/is down this morning). For those along the border in MB/SK, is there more talk at your elevators about direct truck movement south? Congestion at port shouldn't be an issue on these sales.

[cottonpicken]

Whats going on today?
I thought spring wheat limit was suppose to go to 90 cents?

[kryger]

No, I think somebody blinked. It has to be 2 futures months in the same crop year for that to happen. March went up the limit, but May went up .59 and 3/4 cents.

Splitting hairs, yes, but those are the rules.

[chaffmeister]

Trigger is any 2 months of the same crop year have to close bid up the limit or offered down the limit.

So as Kryger stated, it didn't happen yesterday.

But it happened today.

March bid limit up
July offered limit down
(May was only down 52)

Limit is now 90 cents.

But March is only up 27, offered at $17.00

Should be able to clear up a lot of the shorts tonight.