Early payment option and feed barley guaranteed delivery contract extended to end January

[charliep]

Just a note both the CWB early pricing option and the feed barley guarantee delivery contract deadlines have been extended to the end of January.

As a note the premiums have come down on the early payment options. Given the adjustment payment, I would not even consider the 80 % alternative for wheat excluding durum and feed barley. Go for the 90 %. Premiums (today) at 90 % are $2/t for wheat excluding durum, $1.75/t for malt barley and $3/t for durum. My strategy is that I want as much of the pooling money in my pocket as possible.

I will leave discussion on the deficit to farm participants (it is your livelihood and your organization). I will comment there are some things that have firm deadlines (producer pricing options) and other things that have flexible deadlines (early pricing options). Both tools involve risk to the overall pool (I would say equal risk but there are those who would disagree). Why is this?

[TOM4CWB]

Charlie;

The CWB MUST be feeling the heat...

And do not forget the election is less than a year away!

[charliep]

A curious question. My understanding is signup under the early pricing option is massive this year - 2003/04 (farmers needed cash flow right away this fall after 2 years of drought). Who picks up the tab on the early pricing options results are above the federal government guaranteed initial payment but below the amount paid out under the early pricing option. Sound far fetched. What would have happened if there had been a big sign up under the 90 % early pricing option last fall? Would a well planned risk strategy have forced the CWB to lock prices in on the futures side early to capture last falls rally? Does the contingency fund apply to all CWB producer tools (would there have been mixing with the producer pricing options? Is the EPO back stopped by the overall pool?

The room to manuver is much less in the new world so the CWB has to change behavior or there are more disasters to come. The genie is out of the box.

[TOM4CWB]

Charlie;

EPO's are PPO's, no question.

A number of CWB Directors signed up EPO's this fall....,

But after Jim Chatenay signed his the Senior staff said these were PPO's and Directors are not allowed to participate in PPO's according the the Conflict of Interest bylaws the CWB has in effect.

The Contingency Fund is allowed to go into a deficit, and there is no "seperate" pool of contingency funds for each crop, or each different Option... in any Accounting or reporting in financial statements.

Hope this helps.