CWB taking FPC funds to hold up Wheat pools

[charliep]

timm

To highlight, the big price you highlight was around for a matter of days. Something around $350 to $360/tonne port ($8/bu local) was a more realistic target/likely where many farmers priced. If you nailed $477 with a $29 basis on the one day it was available, good on you.

The original posting was about how the CWB handles the producer payment option risk management strategy and the cost to farmers. I also raises questions about how the CWB will put money back into the contingency fund after 2 years (and likely again in 2007/08) of withdrawls. Finally to highlight the original questions (the one that got agstar77 attention) was the tie in between the over pools and the producer payment options both with regard to their risk strategies/where they connect and the potential transfer of revenue. I note agstar77 highlighted in another set of threads that people who use PPO contracts should pick up the whole cost. On the other side, none of the money from PPO contracts should be transferred into the pooling system - a direct transfer of money between farmers.

[timm]

9.00-10.50 net to farmer was available for 3 weeks late feb to mid march for hrsw 1 13.5 thru cwb .simply push one button....they couldnt make it much easier...t4cwb was waiting for 20 i guess.

[TOM4CWB]

timm,

It is obvious that the basis risk and charge the CWB nailed us does not compute for you... that the CWB rips us off... won't let us cash price after Oct31 all the way to August 1 fits your marketing plans timm.

That we miss out on 9 months of the year... opportunity for cash pricing... is fair in your opinion... staggers my mind; on top of the $50-60/t missing on the basis.

[timm]

The flexpro allows pricig untill july 31/09....a basis only contract signed before oct31 under july for -22$ allows pricing until end of june expiry.just push the button on e services tom..

[charliep]

timm

I don't think anyone will disagree with your comment about the value of signing CWB fpc contracts this spring. Most will have $8/bu plus without being as exact on timing as you would indicate.

As I have also said, likely a good thing to sign at least some basis contracts going into the spring/summer.

The questions are from a mechanics and risk management side, are the current products providing fair value for farmers who choose to use these programs? Is it fair to compare what a US farmer is paid on delivery on any given day (spot or deferred delivery) to the CWB producer payment options? What CWB processes are in place with regards to managing risk and flow of money in and out of the contingency fund? What due dilegence does the CWB board of directors and perhaps because a government agency/monopoly, external audit processes of risk management activities are carried out to ensure integrity of the contingency fund dollars? Is there a possibility money could be transferred from the producer pricing options to the over pricing pools?