April 2008-09 PRO Released

[Fransisco]

Hmm... I wonder if this has anything to do with those basis levels?


<blockquote>"The Canadian Wheat Board is spending $12 million on renovations to its Winnipeg office building, which it apparently intends to occupy for some time. The building has an appraised value of $7 million, also its undepreciated value on the Board's books, but the market for such real estate in Winnipeg is not well tested."</blockquote>

[TOM4CWB]

GrainBeatle,
Take a look at:

http://www.uswheat.org/

Look at "Price reports"

Now go back to earlier this winter... when wheat had a basis of $5/bu ABOVE the futures... at the height of the highest futures prices in history.

LOOK for yourself...

And I will remind you once again... that we were offered... $21.99/bu in Sweetgrass/Coutts 400ft south of the Alberta border... on the 26th of February.

February 25th in evening @the Fairmont... in the CWB Hospitality room... with CGC Assistant Commissioner Jim in tow... I begged Chairman Ritter for a meeting and opportunity to get a decent sale done...while Rod Flaman was in the room... smirking away...

Chairman Ritter simply said "TOM, you are the least of my worries right now."


Where ever you are getting your conventional information from... the one thing you must remember is that 'these are not your fathers markets'... and the CWB certainly in no way was equipped or ready to serve 'designated area' commercial growers with cash pricing tools we needed in these times.

That goes for all three the: DPC/FPC/PDS... systems... and especially the basis on the FPC with the sham cutoff of Oct/07 and the method used to calculate it.

If you can support what the CWB did... we know exactly who you work for... and for certain it wouldn't be a premium wheat market for grain growers in the 'designated area'!

Barley marketing is a complete disaster.

Over $100/t income supplement... to the 06-07 B series Feed Barley pool... while claiming the sales of 20,000t were made into premium markets! AT $115/t back to us as growers in Alberta?

How on earth can you defend these Sales people at the CWB... and rag on Parsley?

GOOD GRIEF!

[charliep]

Alberta Agriculture can't provide daily but we do collect weekly. Technology is moving along and we are doing graphing of prices (not basis). Over time will do more.

http://www.agric.gov.ab.ca/app21/grainprices

Click the little graph and a graph will come up.

Will note the basis range of $12.83 (still buying canola) to $69.67 (telling you to take your business elsewhere - no need for more deliveries). I note the differences between the FPC basis and canola starting with the fact canola includes both price and delivery commitment. The company matches the canola purchase from the farmer against an actual sale or a hedge. The FPC does not involve a delivery commitment. Its risk is hedged against its locked in relationship with the most recent PRO.

The FPC basis issues have been a lack of understanding as to how determined and its arbitrary nature/lack of competition in setting. Reduced volatility may have been one reason for its strenghthening but I suspect there are others. Example - CWB basis levels tend to strenghthen in falling markets and weaken in rising markets (maybe a mechanism to bring back offered prices to the forecast PRO value).

[charliep]

I should note the graphs are daily. The information my area captures is weekly and reflects what is published in the weekly crop market review.

http://www1.agric.gov.ab.ca/$department/deptdocs.nsf/all/sdd6248

[broker]

just a note, there actually were days where SK crushers had basis numbers over $100!!

[Burbert]

Duhhhh, the last time I checked the CWB was still alive and ticking, selling Canadian grain as usual. Deceased, means dead, pass on, gone, does note exist any longer. Parsley can only wish for such a condition to exist. Maybe he/she has been consulting a crystal ball and can see the futures. Wow, what a superb marketeer that would make you!

[charliep]

I note grainbeetle comment on not getting too hung up on basis when the actual price/fpc is good. That might lead to a discussion about not necessarily doing the basis and futures on the same day.

Got me thinking about the relationship between the PRO (CWB payment forecast) and the FPC (something the CWB can hedge). Will note the the PRO for 1CWRS 13.5 was $363/tonne versus an FPC of $331. The dollar $32 discount reflects the fact is using higher futures values in the PRO than available in the market today.

What are others interpretation? How does this impact decision making?

[charliep]

Burbert

The CWB isn't dead. Have talked to a couple of CWB types who have highlighted the fact that farmers who use the CWB producer pricing options put more money in their pocket than people who just use the pooling system (a competitive advantage for their business). Are you okay with this or is this a sign these managers are taking money away from others? What is the impact of producer options on the CWB overall risk management strategy?

I look forward to your comments on the CWB marketing tools and how farmers can use them effectively.

[FarmRanger]

Charlie said “farmers who use the CWB producer pricing options put more money in their pocket than people who just use the pooling system (a competitive advantage for their business)”

They are able to time their sales to when they want, and have the ability and/or luck to get the timing right. Any competitive advantage/disadvantage can also be attributed to comparing their price on any given day to a competitor’s price across the border. Since our pricing options never hit the highs that were available in the U.S., can we safely assume that we are at a competitive disadvantage here in the designated area?

[charliep]

Yes. I should have included the fact that CWB producer pricing option prices are still less than what a US farmer gets paid on any given day (including the daily price contract). On the new daily price contract for 2008/09, the gap will widen as the CWB includes off shore markets in this calculation. Pricing methodology will be even less visible.