What if Receiver comes in on Sask Pool

[rain]

What would happen with over delivered CWB grain in storage at a Sask Pool, or Ag Pro grain Facility.

Lets assume the wheat has been contracted to the CWB but the the pool has allowed, or taken delivery of 100% of the contract.

I would think this grain would be safer for producers then nonboard grains and oilseeds.

Am I correct.

[melvill]

I was at an info meeting on licensing and bonding and other security related issues sponsored by the Can. Grain Commission (CGC) a week or so ago.

CWB grain delivered to elevators that has been sold is okay. That grain goes into trust for the CWB. Even if the grain has been sold but the cheque has been deferred, the cheque goes into a CWB trust.

Non-CWB cheques that have been deferred longer than 90 days aren't covered by grainco bonds.

I think producers who have over delivered grain should talk to the CGC about this situation. At the meeting, the CGC said that grain stored in producer owned or leased condos "should" be okay but they kept using the word "should" instead of "will" and I felt a little nervous about that.

If the over delivered grain is not in a produce owned or leased condo, there may be problems especially if it has been in storage for over 90 days. The grainco bonds don't cover anything in storage for longer than 90 days.

Best to contact a CGC Commissioner. Albert Schatzke is the one that was at the meetings and he seemed very approachable. His phone number is (204)983-2732. If you can't get hold of him go to the CGC web site at www.grainscanada.gc.ca and look up the name of the Assistant Commissioner that is the closest to you. The Assistant Commissioner's job is to deal with producers.

[melvill]

Forgot something. The CWB trusts that deferred cheques go into is protected from bankruptcy trusties.

[melvill]

Another mistake in my first post. Deferred cheques only have 30 days of protection after the date of issue not date deferred to. The way around this is to ask the grainco for a certified cheque, which is a very unusual request. It'll probably get you lots of frowns from the company.

Best thing to do is go to http://www.grainscanada.gc.ca/pubs/factsfarm/factsfarmers8.htm and read "Reduce Risks When Selling Your Grain"

[rain]

Unless the rules have changed in the last few years a certified cheque just means there was enough money to cover the cheque the day it was written. It does not mean there is enough money to cover that cheque the next morning.

From past experience I can tell you that sometimes a certified cheque is not worth the paper it is written on.

[TOM4CWB]

Rain;

There was a SWP meeting in Lloydminister a couple of days ago.

The top SWP folks told us that CWB grains never become the property of SWP (SWP is simply an Agent of the CWB), therefore the CWB/Farmer retains ownership, and this grain is not considered an asset of SWP.

I had verbal conformation from Albert that my condo CWB graded CWRS #1 #2 wheat at SWP that is CWB grain, and cannot legally be sold as non-board wheat, therefore it cannot be at risk of being confiscated by any action against SWP or Agpro.

[rain]

Tom what would you do if you had any non board grains with the Pool right now?

[TOM4CWB]

Rain;

I have always tried to leave speculation out of the loop when dealing with grain co's.

There are much better futures/options alternatives to controling price risk, than leaving the grain sitting somewhere, whether in a bin or at the elevator.

For me, there has never been any question, I therefore , price and immediatly cash the cheque.

But then I am not one that likes surprises!

[rain]

Does anyone know how big of bond the pool has?

[TOM4CWB]

Rain;

The primary elevator operator is allowed to use grain stocks that they own, as an asset against outstanding liabilities... therefore is the grain elevator has remained current on paying for grain, and does get paid for all sales of grain that are shipped... there is little to be concerned about.

I know Agpro has never shown any signs of insolvency, in my personal experence... they have remained current on paying bills, and run a tight financial ship, with tight cash flow control. These indicators are a good sign, that other than refinancing issues, SWP/Agpro management is efficient and using accepted financial management techniques.

I have not heard of any major losses from export default on grain payments recently, other than the CWB sticking SWP/Agpro a few years ago with a bad credit sale... which I am sure has been dealt with, financially, long ago.

As far as I am aware, it is impossible to find out how much any Grain Co has pledged in letters of credit, or bonds, to the CGC.

So the level of bonding coverage question is considered commercially sensitive, private info, not for disclosure to anyone.

Having your bank do a credit check, if your bank id different than SWP/Agpro's can reveal a little info, so all the best... in your conquest of credit info!

[wedino]

Anyone with grain that is in storage at SWP & was delivered without quota(over & above contract call) should haul it home immediately. Same goes for non board grains whether in storage or in condos(cash it out or haul it out). Not worth the hassle to deal with receivers or bond cos. My understanding is that this is happening at the Pool, the result of the meetings this week. Could some of the downward pressure on canola this week be a result of farmers selling what they had in storage at the Pool?

Anyone that has prepaid for inputs at the Pool is well advised to take delivery or get the cash.

I think the perception of the Pool going under has fried them. Even if they can pull off the financing deal they are trying to sell, who will deal with them when there is the constant fear of them going broke.

[rain]

I hear you wedino, I feel take the Money and run. You can buy a call or do what ever but the risk of leaving it there is just to much in my opinion.