Pay attention to Today's PRO - It Has Imlication for What Grades/Proteins You Apply to Fixed Price C

[charliep]

Look at todays PRO.

The CWB today released its Pool Return Outlook (PRO) for the 2006-07 crop year. Wheat PROs are between $5 and $20 higher per tonne versus the September PRO, while durum PROs range from unchanged to $9 per tonne higher. The Pool A feed barley PRO is up $28 per tonne over last month, while designated barley PROs are up by $11 for two-row and $7 for six-row.

YOU WILL NOTE THERE ARE SUBSTANTIAL DIFFERENCES BETWEEN THE INITIAL PAYMENT SPREADS AND THAT OF THE PRO. UNDER THE CURRENT SCENARIO (DISTRICT ELECTIONS/THE POISONED ENVIRONMENT), HELL WILL FREEZE OVER BEFORE THERE IS AN ADJUSTMENT PAYMENT. YOU NEED TO UNDERSTAND THE IMPLICATIONS OF APPLYING DIFFERENT GRADES/PROTEINS AND MAKE DECISIONS ACCORDINGLY OR WITH 100 % CERTAINTY, YOU WILL LEAVE MONEY ON THE TABLE. A MORE INTERESTING QUESTIONS IS HOW THE CWB HANDLES SPREAD RISK IN THEIR PRICING OPTIONS BUT THAT IS ANOTHER TOPIC.

[charliep]

I also note the changes in basis (or lact there of) in the fixed price contract. If you have a futures only basis contract/are waiting to lock in or are wanting to sign an FPC, I would suggest you are in an uncomfortable situation (particularly if CWR/WS, CWES or CWSWS).

I also have to admit to being amazed at the changes in the fpc values for both feed and malt barley. From the CWB supporter side, can help me explain what happened to today with a $16/tonne in the feed barley fpc/effective removal of the adjustment factor. Similar comment malt barley. What is the difference between today and yesterday in the actual market? What is the adjustment factor? Even within the CWB, why aren't there effect cash marketing tools?

[craig]

Charlie good you pointed out these things. It amazes me that on one hand you indicate there is strength and demand in the market place by raising the PRO's (ironically when U.S. futures seem in retracement) while at the same time widening the basis which normally means no demand. It brings a series of questions. Is the CWB trying to discourage producers from taking a basis only On FPC before the end of the month? Is the Board trying to make the pool account look better than FPC's. It does bring out the point that the board does seem to be using PRO's and Basis to their benefit and not necessarily to the producers benefit. It will be interesting to see where the Pro's go in the coming month.