The CWB Basis Charges

[crusher]

Cash pricing works for me, or all year basis, or quarterly pools. Many years I sell to the board on the last series, which must be brutal for the board's sales department, but hey that's the rules.

Did some Cargill IMC production contracts new crop - yields don't look sexy, but I've had okay success growing it in the past. Hadn't hedge any new crop so I thought this was reasonable risk management.

[TOM4CWB]

Crusher;

My thoughts exactly on the Canola... if 50% of my 04 production is done through a flat price production contract @ 10, then I have an excelent risk management package in place... now we need to buy 04 Nov Calls when Feb blues lower premium costs!

On the CWB, I am totally with you there as well... a little flex.C/W multi pools in a year, cash pricing... earlier prepricing... all would go a long way to add to our risk management tools!

[JACKFLASH]

TOM4CWB

Have you looked at the CWB's exchange for physicals program? What do you think?

[TOM4CWB]

Jackflash;

The program could work IF we were given a basis upfront... but the CDN$ is hard to hedge because of contract size... if I remember right it was $100,000.00 contracts. TO be forced to hedge this amount of wheat... at one time... when a person doesn't even know the basis is ... simply absurd.

The CWB simply are living on a different planet than farm managers that are actually risk adverse...

As farm managers we are responsible to mitigate risk... but the CWB expects us to create more total risk... than the hedge on a futures alone would reduce risk.

Thus the CWB answer for early hedges (before PPO's are avaliable) is a slick clever trick to misrepresent a futures exchange program as a significant risk management tool for the majority of "designated area" grain farmers.