New FlexPRO Example Prices Posted

[charliep]

The CWB has started posting example (not real - can't lock in these prices) FlexPRO prices. Yesterday was the first day you could start signing the FlexPRO contracts which are at this point a production contract (committed volume only - no price till August 1).

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

Interesting the new FlexPRO is exactly 25 cents/ tonne (don't spend it all in one place) higher than the FPC.

Also will note that no documentation on how prices arrived at or effort to tie into visible cash/futures markets. If the CWB leaves the pricing side confidential/secret (don't know why), they should provide background on the methodology and the weighting of prices used in the FlexPRO by country/region (similar to what would be available in a financial statement from a mutual fund investment).

What are others thoughts?

[parsley]

"A Day in the Life of Wheat Board Pricing"

...a one act play by Licka Lotta DoughUp


Scene: Wheat Board Marketing Department


Ring, ring


CWB: "Buyback Department. How can you help us?"

Farmer Warrenj: "How do you determine the price of a buyback?"

CWB: "Well first we have to determine the price of grain in the market you are selling into. We see what the CWB is selling the wheat for in that market. Where are you selling your grain to?"

Farmer Warrenj: "I have 5000 bushels of wheat going to California. It's #1 HRS"


CWB: "And how much are they paying you?"

Farmer Warrenj: "Well, it's $24.00 per bushel."

CWB: "Hmm. Same price we're getting. So the price you will pay will be the price of grain in California minus the initial price, so that is your buyback."

Farmer Warrenj: "Hey, how did you set the price in California?"

CWB: "We're selling it for twenty-four. But that's sorta confidential, so keep that under your hat."

Farmer Warrenj: "Well, that killed my sale."


He exits.


Farmer Ricks comes in

Farmer Ricks: "I got some wheat goin' to California. I gotta do the buyback."

CWB: "What price are you getting?"


Ricks: "$41.00"

CWB: "Well, that's the price we sell it for in California...so you'll have to pay the difference between the initial price and the CWB's established market price where you're selling your grian into."

Ricks: "That killed my sale."


CWB: "We gotta price our grain according to how much we sell it for."

Ricks exits.

Bobn: "I'm selling wheat into California. What's the price in California you're getting?"


CWB: "I'll look it up. $41.00"

Bobn: "Okay, I'll pay the difference between the inital price and the world price of $41.00."

CWB: "Good. You'll have to fill ou the application. How much is this load going for? "

Bobn: "51.00/bu."

CWB: "Gee, I just got some new pricing information here. The price is $51.00. You still want to do the buyback?"

Door slams.



ring ring

CWB: "Ya, Earl, let's go for lunch. I been pricing grain all morning, and am sure glad I studied markets and pricing in University for this job. You buyin?"

Ear: "Farmers are buyin', you dumbo. "


Actors all bow and smile.


Pricing, charliep. The experts are the CWB.
Parsley

[GrainBeetle]

charlie: you are basically asking the cwb to publicly disclose it's sales value to each buyer / country / destination?

what do you suppose the implications of this might be?

[kryger]

The Flexpro is an FPC in disguise. They might as well have run the FPC all year and saved the farmers thousands of dollars in development costs. How many more bodies do they need to hire to admin. this program. This shows that they are a Government agency, they sure behave like it. The CWB is not very creative with their farmer programs, just rehash all the old crap, slap on a new name, hire a few more people and tell everybody how responsive they are to the farmers needs and wants.

I have e-mailed the CWB asking for more information on Flexpro as to how they are going to arrive at a price. Five e-mails in the last five days, and not one response. Usually I get at least an e-mail letting me know that they received the e-mail.

Charlie, the Flexpro is $.25/tonne less than the Fixed Price Contract.

I would sure like to know how they arrive at the price they post on the website.

[GrainBeetle]

Parsley: please refer to the rules of this site, I.e not to overwhelm any single thread with your own postings.
This site is slow enough , we dont need you cluttering it with spam.

ATTN: JOEDALES: please start a new thread for organic farmers for parsley. perhaps it will clean up this forum, and make it easier to read the relevant comments.

[charliep]

And what would be wrong with that. I note that USDA has public disclosure on most port based export sales. Based on previous experience all sales would be within some range of those values. To be honest, most sales prices are well known among grain merchants/exporters. The Canadian farmer is the only one really kept in the dark. And to what purpose?

Could go into a long tirade about lack of price discovery/visibility in CWB producer pricing options but won't. Will note that the CWB producer survey clearly demonstrates farmers want more information and more alternatives. With flaws, the daily price contract (based loosely on US wheat prices) provided some of this. We have moved back to a system where there is no price discovery as a part of the FlexPro and no accountability by the CWB. I suspect that in a world where at least a quarter and maybe a half will be priced outside the traditional pooling system, the same problems will exist that created the $40 mln dollar loss on the 2006/07 pooling year and likely is currently happening in the 2007/08 one.

So the challenge goes to you (if you care to enter the world of marketing versus staying on the political/policy side) - how does the CWB meet the needs for visibilily, authority and accountability in their pricing options? What doesn't the CWB look at things like shorter pooling periods or 100 % cash pricing against sales versus linking to the PRO's/final payments?

[charliep]

While you are here grainbeetle, why do farmers year after year (see CWB producer survey) support a dual market? I note the tirade/smuggness in other threads about the recent court decisions but I think the CWB could spend millions of farmers hard earned dollars on advertising/other tools and farmers would still favor market choice which includes the CWB. I note the survey results of the question on whether farmer favor arbitration in CWB dealings with grain companies versus court action - farmers know this puts offsetting power in grain hands and farmers support this.

[bucket]

here is my best advice. Pay your bills with $19 - 20 flax, $16 canola, $10 peas, 40cent lentils. Let the pro boarders fill the first panamax then wait till the board comes up with some real prices away from the pool and let the pro-boarders say how that $6 wheat made them money. HAHAHAHAHAHA all the way to the bank.

[sidvicious02]

Quote: "To be honest, most sales prices are well known among grain merchants/exporters."

To further that thought, grain companies actually sell a significant amount of the grain for the CWB as sales agents.

[parsley]

sidvicious02,

You bet.

Most CWB grain is sold through agents of the Board.

Everyone knows prices except the farmers.

[Ron]

Bucket I like the way you think, I plan on delivering my FPC's, then take the advance,move everything but CWB and dont sign up untill C contract comes out (unless I can sell it as seed into the US, whatever happened to the scaremongering about a seed grower being charged?)

SCREW THE CWB

[mbratrud]

As far as how they arive at the price havent you heard the line "we can't give you all the details to maintain the integrity of the pool".... Why don't the flip it around so you have to sign up to be in the pool before July 31st? That way they wouldn't have to worry about the integrity of the pool, their tonnage would be a solid number. Then just post a Daily Price, and Defered pricing options for everyone else..