EPO Risk

[TOM4CWB]

Charlie;

I see the 90% EPO for wheat is at $1.75/t, the lowest I have seen.

At about 1% of the value of our grain being sold the CWB... is this a good risk mangement tool?

WHat is the risk that the CWB will get less than 90% of the December PRO?

At $196/t for a #1CWRS 13.5px... it does not seem like that much risk exists for prices to go lower.

We need a transparent report on sales for the CWB pool this marketing year... to know CWB sales commitments... at what values commitments have been made.. to know if any (or no) currency hedges are in place... to make an informed decision.

Is this type of info avaliable anywhere Charlie?

Since the CWB makes good money selling EPO's, can PRO's even be trusted?

[TOM4CWB]

Charlie;

I see this on the AWB site:

APH wheat (13% protein 5% screenings 12.5% moisture) is $243.50 in the latest AWB EPR (PRO)

Why is the CWB at $196/t when the AWB is at $245.50?

...I see these topics on the AWB site;

AWB distributes $393 million from 2002 Pool

THE Jan 13 04 PRO on APH wheat for 2002 was $292.00/t while the Ausie farmer has received 90% @$262.80/t while we got $250/t for our 2002 wheat.

Interesting comments by the AWB about the 2002 crop;

"We had much smaller tonnages delivered to the 2002 Pool which presented a number of marketing challenges, but we have been well advanced with our active management program, and the benefits are reflected in the distributions, and the healthy EPRs," Ms Scales said.

"Our currency hedging strategy is protecting equity for Pool participants, with EPRs actually increasing in recent months, despite the substantial increase in the Australian dollar versus the US dollar.

Further Charlie, did you see the tendering system to sell domestic wheat?

“RESULTS OF AWB LIMITED TENDER NUMBER 286

HELD WEDNESDAY 7th January 2004.

The 278th tender of wheat, conducted by KPMG for the National Pool, has been completed. The sale by tender offered wheat held in the National Pools to domestic customers with the aim of ensuring that all domestic customers had equivalent access to stocks.”

Is this not a fairer way to sell domestic wheat than the CWB system?

[charliep]

As a manager of price risk and cashflow, I would use the early pricing option on 100 % of the wheat I plan to deliver in the 2003/04 crop year. Your other questions should be addressed to the CWB at the accountability meetings.

[TOM4CWB]

Charlie;

The $40/t spread between AWB and CWB wheat PRO's is legit then?

Would you wait till after this weeks PRO or is there too much wheat market volitility (south of the 49th)?

[parsley]

Tom4CWB, why don't we make up a list of questions online that could be asked at the Wheat Board meetings?

Parsley

[charliep]

Tom4cwb

In making this judgement call, I look at the PPO page (http://www.cwb.ca/db/contracts/ppo/ppo_prices.nsf/fixed_price/fbpc-wheat-2003-mhrs-20031217.html.)

Converted MGE March futures on Dec. 17 was $194.30/tonne. Friday it was $197.50/tonne. Depending on what percentage of the crop has been sold, I would expect the January PRO to be unchanged to up $5/tonne.