Deadline Today for CWB Producer Pricing Contracts

[charliep]

Today is the last chance to sign a CWB fixed price or basis contract. Time to poop or get off the pot.

Nice rally today in wheat. Would consider pulling the trigger using fpc on some portion of wheat (all classes but not durum). I also like the idea of having at least some tonnage of basis contract signed. My target would be to have full payment on CWB wheat delivered prior to Nov. 15 fully priced with all money deposited prior to Dec. 1. Deliveries further out will use the pool. I would also be watching the early pricing option for opportunities.

Reason. Today's price is good and should be considered. Having said that, I think wheat has potential to move higher into the fall. If it does, I want to be able to price out some more. If you need more encouragement for marketing action, look at last falls wheat charts.

[Everest]

I checked the math today for FPC vs PRO. The FPC today will give me $15/MT more than the PRO. My guess is the PRO has at least $15 upside given the history of how the CWB is conservative early in the crop year on their PRO's. Given that Minniapolis futures may not be fully reflecting the drought of 2003, I would probably do a basis contract rather than a fpc. A 30 cent US rally would add another $15/MT.

As a result, I am not inclined to do a fpc, but may do a basis contract.

I have until 7:00AM tomorrow to do something.......or nothing.

[melvill]

Today one of my farmer friends added another 40 tonnes of soft white wheat FPC @ $199.40 to his already contracted 80 tonnes. That'll bring him up to a little over 25% contracted. His logic was that this is $21/tonne above the PRO and, more importantly, there's no waiting for months for all of his cash. He has all his money right up front for fall cash flow. It may or may not be the highest price that he gets for that 120 tonnes but he knows what he's getting.

This is the third year he has used the FPC. Last year he used the FPC for about 1/3 of his production and then PRO prices rallied upward only to slide down to below his contracted price. What is it about "a bird in the hand is better than . . . "?

[AdamSmith]

Could someone please explain to me the logic behind the July 31 deadline to sign up fixed price or basis contracts?

Last time I checked the open market is always open.

[melvill]

AdamSmith, this is a question you should take up with your local elected CWB director. A number of other producers and some of us in associated businesses have been asking the same question.

A little lobbying of your direct might get it extended - even another month would be better than nothing.