CWB Report on DPC proof the 'single desk' is bogus!

[TOM4CWB]

Charlie,

Get a load of this...

[CWB Annual Report 07-08 page 91]"A Daily
Price Contract (DPC) is available for wheat. It operates similar to an FPC contract; however, the sign-up occurs before the beginning of the
pricing period. The sign-up period for the 2007-08 DPC began on June 18, 2007 and ended on July 20, 2007 and the pricing point is U.S.
elevator spot prices."

Excuse me... I phoned before 9:30am on June 18th... and was told the DPC program was full. And the CWB reports it was open till July 20, 2007?

OK CWB Directors... where are the basis gains reported for DPC contracted wheat?

NOT REPORTED...

NOT even spoken of... cause they were 'All attributable to the 'single desk'... not part of the PPO program.

Get a load of this...

"After accounting for pricing
damages (offset by contracted values net hedging losses,
interest and administrative expenses), the program had
a net deficit of $18.5 million. The reasons for this deficit
are similar to those with the FPC and BPC programs.
However, the DPC had additional basis risks as it was
based on U.S. elevator prices. During the period of
pricing, the U.S. elevator bids became dramatically out of
line with pricing in the rest of the world, largely because
little grain was available for sale at U.S. elevators."...

"The DPC faces heavy basis risk in part because pricing
is based on a single market, that of U.S. northern-tier
states. The fact that the CWB sells on multiple market
structures creates unhedgeable risk from inter-market
spread volatility."

Then comes a sidgen of truth...

"Offsetting these losses were gains in basis."

OK... so the 'says' in these statements... the CWB lost $18.5M on purchases of 654 479 tonnes... in a warped program... that most times paid 'designated area' wheat growers... $40/t BELOW spot prices just across the 49th in Montana/ND.

AND...

The CWB had the cheaper Canadian grain handling system to bolster CWB earnings on these purchases from 'designated area' wheat growers.

To make this loss claim in the Financials... the CWB couldn't get as good a value as US northern elevators.

All this proves... is the 'single desk' is bogus... and since the majority of the DNS wheat grown just across the border in the US... was exported into the same markets as the CWB sold into...

All this proves... is the CWB claim to earn premiums... IS FALSE... by their own admission.

Charlie;

THis was quite a piece of work... for any auditor to sign on the dotted line... And Pres. Ian White to sign up to this... all people who have proffesional backgrounds... and should have known better!

Wall Street... you don't hold a candle to the CWB! NO DISCLOSURE... NO PROBLEM.

And for all this... the CWB management got; 30% bonus payments... can anyone find where they hid that information?

[TOM4CWB]

Dear Charlie,

How much of the 650,000t do you guess was priced between Jan 1/08... and April 1/08?

How much of the CWB pool (% sold) do you guess the CWB sold?

A look at the PRO during this period... gives an indication... that a very small portion of the (07-08 pooled CWB)wheat crop was sold during this time period... simply from PRO changes.

Yet deliveries were on track... so basis gains on PPO contracted wheat must have been massive!

Why no results with the breakdown of basis gains vs. hedge losses... ? What were the actual CWB losses?

[agriman]

Look, guys. Nobody is going to know any more about this than the mighty CWB wants you to know, which is nil. Speculate and add up all you want. You will never prove anything. Bits and pieces come out pointing to the high probability that the CWB was big short in March 2008 Minneqapolis futures and long holders, guessing who the short was and realizing that the short had no way to cover its positions by delivery, squeezed the shit out of it. That cost the CWB, and eventually western Canadian wheat growers, $90 million. The CWB's trading adventure and its incompetence is the sole reason why Minneapolis March 2008 futures hit $25 a bushel, a stunning $900 a tonne. Long holders must have had a helluva party. Some guys made enough to retire on at Fisher Island thanks to our good ol' CWB. The crazy thing is that wheat growers who were in the alternative pricing schemes actually got more for their wheat than the CWB did. Talk about crazy.

[TOM4CWB]

Agriman;

And then there were the 'Freinds of the CWB'... who the CWB cash traded and paid $846/t.

We should know EXACTLY who was given this gift. Want to make a bet it was the most vocal CWB 'single desk' supporters! this program was put together at the last moment... to pay big time for these folks. No year ahead booking... no contributions to the pool.

And those Organic export licenses... at under $10/t... when I was required to pay $500/t?

How is this any where near fair... and anything but a conflict of interest... for organic directors of the CWB?

THis is criminal.

[charliep]

tom4cwb

On your question on how much wheat was priced in the January to March 08 period, the answer is likely not a lot. The CWB posted prices that farmers sold at in the year presentation and I assume the DPC decision wouldn't be a lot different than the FPC ones. From CWB information, 87 % of farmers who used PPO contracts sold for under $7/bu (similar to the what the CWB says the US farmer sold for in the next slide), 8 % for $7 to $10/bu, $2 % for $10 to $15/bu and 1 % for over $15/bu. The implication is very little of the higher price was distributed to farmers but rather the process showed the DPC as a loss because the CWB hedging strategy carries risk across a whole pooling period (with all the risk associated with it).

See slides 7 to 9 of the yearend report. Will note the $560 mln better price than what the US farmer got. Won't start a new thread but can anyone demonstrate this in the annual report.

http://www.cwb.ca/public/en/newsroom/releases/pdf/webcast_073108.pdf