What is the CWB Flexpro?

[TOM4CWB]

Charlie,

I see the Flexpro is just an EPO in a little different package...

"Prices offered through FlexPro will be directly linked to all markets the CWB sells into incorporating the forward futures market. FlexPro will take into account all futures months over the sales period. FlexPro pricing will be available further forward in the year and may face different market risks as the year progresses. Earlier in the crop year, the basis will be subject to more volatility but will become more firm as sales are completed over the course of the crop year."

This is obviously NOT a replacement for the DPC and will make planned sales to international markets impossible for Producer Direct Sales... without risk that no sane person would find acceptable.

[btjadenlepp]

I think it looks more like the FPC without the adjustment factor.

Essentially they replaced a program that offered prices up to $300/t above the PRO with one that will vary from the FPC by $10-20/t. As I said on a previous thread, a tonnage limit would not be a problem.

We put out a press release in response to this on Wednesday, it's at www.farmlinksolutions.ca under Market Insights.

[charliep]

There is somewhat more (not a lot) information on the CWB website.

http://www.cwb.ca/public/en/farmers/producer/flexpro/

Quote 1 "Prices offered through FlexPro will be directly linked to all markets the CWB sells into incorporating the forward futures market. FlexPro will take into account all futures months over the sales period. FlexPro pricing will be available further forward in the year and may face different market risks as the year progresses. Earlier in the crop year, the basis will be subject to more volatility but will become more firm as sales are completed over the course of the crop year."

Farmers need clarity on how this process will work. Will note that when the DPC first came out, the CWB posted example prices for about 2 months prior to the actual availabilty. Would be a good idea this year so farmer can see an example of how a theoretical flexpro would compare to the FPC/DPC.

Also note the CWB flexpro risk management methodology/process will be similar to the current products.

Quote 2: "How does it work?
On delivery, you receive the initial payment for the grade delivered. An additional payment will be issued by the CWB within 10 business days of the cash purchase ticket being correctly reported. Producers who choose a FlexPro contract are not eligible for adjustment, interim or final payments from the pool account.

Deliveries will be automatically applied to the highest priced FlexPro contract first. Producers must contact the CWB at settlement if they want their deliveries applied to a different contract.

Additional payment
The CWB additional payment is calculated as:
FlexPro contract price - reference grade initial payment - feed discount (if applicable)

I will note that the CWB has moved away from using market based spreads used in the DPC and instead using initial payment ones. Someone will have to explain the logic of this to me both from a farmer price signal side and risk management side.

[TOM4CWB]

Charlie,

Just in case you didn't notice... my quote is the same as yours!

The Flexpro is a blend of futures and sales made throughout the crop year... along with basis that is also a changing factor.

The long and short of this... is that it is a 'daily PRO' that can be locked in... the short and sweet tom4cwb explanation!

Now tell me why I am wrong!

[TOM4CWB]

Just in case you think I am nuts... take a look at the NAME! flexPRO

[charliep]

I did notice after. Sorry about that.

Based on the description, you and Brenda are both right - a revamped FPC. If you take the CWB at their word, I guess my comment requesting a comparison of the new flexpro to the current products is redundant. If the flexpro is an fpc without an adjustment, then you can simply look at new crop fpc prices.

I would say something but the program speaks - nothing creative or innovative but a giant leap back.

I also note again my comment on spreads. This is a significant step back.