Thoughts on FlexPro

[charliep]

Any thoughts on the FlexPro (replacement for the Daily Price Contract)? Has anyone signed up yet? Deadline July 28. Will note the DPC sold out in 1 1/2 hours and my sense (realizing no tonnage limit) is there is not a lot of interest in the FlexPro (CWB keep promoting). I realize all the comments in previous threads but interesting to gauge where people are at now that it is decision making time.

Also note the lack of comments by farm organizations/others on the program. The cashplus program for malt barley generated a lot of reaction (perhaps because in the middle of the barley debate) but the flexpro seems to have been introduced without a whimper. Are farmer happy with black box pricing for a production contract that is nothing more than a fixed price contract with no basis commitment/adjustment factor after Aug. 1?

[charliep]

Checked the CWB website and guess what, the flexpro sample price equals the fpc price again today.

August 1, the variation is likely to be the adjustment factor (assuming they remain the same). The adjustment factor can be positive (falling prices) or a negative (rising prices). The adjustment factor tended to have a stabalizing impact bringing back the fpc to the PRO - flexpro will not have this so look for more price volatility.

What will be interesting is a comparison after October 31. To hold a contract unpriced after November, a farmer will have had to have signed an basis contract (basis only or a futures only). An fpc is tied to a futures month with a cost of rolling the hedge is you want to move the contract forward. A flexpro after November 1 will be a cash price offering only - take it or leave it. The basis component and how wheat already priced into the pool will be handled unknown. The price will be 100 percent black box no tie to any visible market (something the dpc did do with US markets - SK3 likely to yell at me for suggesting but at least we could use the actual price as a point of conversation).

I have to again express my on going frustration that both the flexpro and the fpc use initial payment spreads versus market based ones in the now extinct dpc.

[FarmRanger]

I'd like to see the CWB premium that we are told we are getting.

When 100 miles of freight can eat all that premium and more, then I question the premium.

[charliep]

Just a note I have done a three part series (starting today) on Alberta Ag's call of the land on the "FlexPro" starting today.

http://www1.agric.gov.ab.ca/$department/newslett.nsf/all/cotl13751