Wheat Rally/2004 FPC Contracts

[charliep]

Just a note to highlight the rally in all US wheat futures markets today and impact on the CWB fixed price contracts.

Approximate Alberta based payments:

1 CWRS 13.5 - $4.90/bu

1 CPSR - $3.90/bu

1 CWSWS - $4.50/bu

Should you do something today? Don't know but you should be on alert to price some on this rally with how you approach this question fitting your situation.

[craig]

Charlie
I've been watching this closely and with the Agricore 5700 contract at an additional $10.00 premium it gets CPSR almost to $4.25 my location. Problem was that I was considering pricing yesterday and then markets roared today. Notice basis on December widened by about a buck. Magic number last year was $4.00 and on 75 Bushel crop grosses $300.00 another magic number. Question mark is can we expect normal yields

[rain]

Charlie are these delivered elevator prices Alberta?

[charliep]

They are delivered elevator. Average Alberta with no trucking premiums/other benefits. I would be watching action today.

[rodb]

Those prices are for #1 & #2 grades. What happens if we get a poor fall and or frost and wind up with feed? Anyone know the discounts off the top of their head,and the ramifications of a lower grade?

[TOM4CWB]

Rodb;

The spread is the difference between #1CWRS 13.5 and Canada Feed initial price spread, plus the special CWB additional CWB feed wheat loss...

http://www.cwb.ca/db/contracts/ppo/ppo_prices.nsf/fixed_price/fbpc-wheat-2003-mhrs-20040319.html

For March 19 the special Feed WHeat discount on CWRS was $14.10/t

The initial price spread is;

http://www.cwb.ca/en/contracts/farmer_payments/2003/tonne/2003-04-ini_tonnesmar.pdf

#1CWRS 13.5 = $169.95/t
MINUS
Canada Feed = $108.25/t

The total feed wheat discount today is;

$75.80/t

Now lets see what a Cash Basis would give today off the July 31/03 (13.74) CWB Basis, the roll to May 04 is $7.70/t;

March 19 04 Basis price from the CWB off the May 04 Minni is;

$209.08/t
add $13.74/t
Minus $7.70/t
Minus $75.80/t
Minus $45/t freight and elevation;

=
$94.32/t or $2.57/bu.

The CWB price is about a dollar a bu. short of the domestic feed wheat prices.

[rodb]

Tom4CWB

Thanks Tom

This is a no brainer in our country especially if you look at the long term grade average. We are due for an early frost, haven't had one since 92. I think I will go with my long term preference and steer clear of the CWB and its new found pricing options.