URGENT CWB "B" SERIES Delivery change for 05-06

[TOM4CWB]

Charlie;

I was trying to find out about "B" deliveries on the Jan 31st deadline today.

THE Edmonton ATL Cargill people told me about this a few minutes ago.

The CWB is NOT Allowing 2004 crop to be delivered into the 2005-06 crop year through the normal process a farmer had the right to do in the past.

I tried to call the CWB call centre... 30 minute wait time.

Something in the e-mail the Country Elevator Managers got, about pool integrity... this right has been cancelled by the CWB in the last couple of days.

It is not on the CWB Web site that I could find.

I KNOW many folks on this site used this long standing risk management tool, so be very careful when signing up your "B" series contracts.

[melvill]

Tom, your comment or question doesn't apply to all 2004 grain. It actually only applies to 2004 grain that a producer might have in on-farm storage and commit to a 05-06 Fixed Price Contract or Basis Contract. The Board isn't going to allow 2004 wheat to be delivered before the end of the crop year that is "put in storage" and then delivered August 2 against either a fixed price contract or a basis payment contract. My understanding is that this was a decision made at the director level.

This will not be good news for many wheat growers who are very uncomfortable with committing crop before it's in the bin.

I'll get more details and post them to this thread as soon as I get them.

[melvill]

This is the actual CWB "Country Elevator News":

"Settling 2004-05 deliveries against 2005-06 Fixed Price Contracts and Basis Payment Contracts

Beginning with the 2005-06 Fixed Price Contract (FPC) and Basis Payment Contract
(BPC) programs, wheat, durum, feed barley and selected barley delivered and committed into storage on 2004-05 CWB delivery contracts cannot be settled against a 2005-06 FPC or BPC.

This option is being removed because it provides a market anomaly. Farmers price their grain based on three price signals - the FPC/BPC, 2004-05 PRO and the 2005-06 PRO. These price signals are available during the last six months of the crop year, and minimize price risk that would not otherwise exist in the market. Allowing farmers to settle deliveries against FPC and BPC contracts in the new pool year would let them lock in a price, while picking and choosing between two forecasted pool returns. These farmers make this decision while assuming no risk.

This refinement also protects the integrity of the pool accounts, a central consideration in all Producer Payment Option (PPO) programs. When deliveries from the old crop year are applied to a new crop year FPC or BPC, it can have a negative impact on the value of the old pool. In a rising market, farmers who deliver early in the year could see their ability to benefit from higher prices at the end of the year diminished. In a falling market, settlements in the new crop year are less likely to occur, meaning the lower values will be included in the old crop pool, lowering its overall value.

Farmers will still have the option to settle storage tickets for 2004-05 deliveries against the 2005-06 pool account, after August 1, 2005. The option to use the 2005-06 Early Payment Option (EPO) program will also be available, to address cash flow requirements.

Farmers who choose to apply their stored deliveries between pools, are still basing their decision on forecasted price signals using the PRO, meaning they are individually choosing to assume risk when making this decision."

My opinion is that this is not good news. It removes another great alternative/strategy. I'll have to delve into the reasons.

[JACKFLASH]

Tom:
I heard about this on Friday morning,from someone in the grain trade,not thru the CWB.
My understanding was you could not carry a FPC through into the 05-06 if it was on the A series. But now melvil tells more.
Another window of opportunity closed, when trying to decide to sell my GRAIN.

[wd9]

It's not your grain, it's the CWB's grain.

[JACKFLASH]

Wd9
And?????

[TOM4CWB]

WD9,

Interesting that you think all wheat and barley for export belong to the CWB.

A reasonable person would have still expected some kind of transparent policy process to alert "designated area" growers this marketing tool was in the scope of the CWB gun.

Further, I fail to understand how a Producer Pricing Option that was by the CWB's own design... created and maintained so it could not conflict with CWB pools... can conflict with them!

This type of logic means that the CWB must end all PPO's that are flat pricing tools, doesn't it Jackflash and WD9?

[mcfarms]

Tom
He's saying it very tounge in cheek.......he's kinda like that.lol

[wd9]

Tongue in cheek, well, ya. But when I think about my marketing decisions for milling wheat and malt barley, be it FPC, EPO, and a hundred other acronyms, I really don't think long about them. I sign a permit book, a series contract, and produce for the board - not the customer.

I produce high protein pretty wheat when I don't know if my customer wants maybe low protein or high riboflavin, or dark hulled wheats. I produce to get that #1 CWRS 14.5 and greater because that is what the price says I should grow. Big disconnect.

Pretty simple, but if it started out as my grain when does it stop being my grain? When I sign the permit book before I put the seed in the ground? The series contract? Dump it in the elevator? Did it ever start out as my grain, which was my first question?

Follow the NAFTA challenge in the US by the woodies down south. Now there is a good discussion on property rights between Canada and the US.

Yah, I got lots of questions, but few answers. I admit it. Hopefully this forum can always continue to provide thought provoking discussions and a little entertainment.

So, I'll throw it out again, do you ever 'own' your milling wheat and malt barley or do you just sign a contract for logistics sake without a preset price or a customer.

[JACKFLASH]

Tom4cwb

Tom all the options offered by the CWB were to give farmers more control over the sale of our grain under the CWB. Also keep some of us fringe guys in the fold.
Quite frankly I liked them.
I find it hard to understand why the wheat board could not have given us the warning sooner,not the last day to decide on contract signup deadline.
It gives you an uncomfortable feeling about there is more to the issue.
You always strive to make marketing options better not worse, and yes to answer your question, if PPO's FPC,EPO's aren't there to benefit anyone, get rid of them.

[TOM4CWB]

Jackflash;

It seriously looks like the CWB can make the most money, with the least risk to the pool... through EPO contracts.

If PPO's are a risk to the pool in the case just stated by the CWB, they are a risk the rest of the time as well.

All that happened was we waited to deliver our grain, in an orderly manner... in a low risk transaction to our farms... with an option to have two crop years to choose from to meet the contract requirements we entered into with the CWB.

The PPO's using the PRO are frankly the CWB's real problem... right along with the failure to provide a fair reasonable transparent cash prices.

Take the #1CWRS needed right now in Vancouver for Japan.

We have local #1CWRS sitting in farmers bins here in Alberta.

If a premium were offered... to the farmer, we would be more than happy to provide the grain needed.

Instead the Railways and grain companies get the extra handle... at our [the farmer's own] expense.

Lost Prosperity.

Lost Opportunity.

Lost Hope.

Lost Faith.

A "single desk" win... claimed by the CWB.

[kenzie]

So let's look at this CWB pricing and delivery options thing in another light. The reality is that the board will be part of our lives for a longtime to come. It's time to get past the retoric and use the tools at hand. A FPC for $5.35 on 60% of this years wheat is looking good on my farm. The old adage goes if you can't beat them join them But in this case beat em and move on.
And WD9 you, in reality never get to call the grain you produce "your own" you just get the pleasure of producing it and managing the ever incresing risk.

[wd9]

Oh look; its a burning issue!

[JACKFLASH]

kenzie:

Is that 5.35 with the freight out???

[TOM4CWB]

Kenzie;

If the CWB could become our service provider... into the market place, in a considerate manner... making trades farmers who actually hold the grain they market; agree to:

What a difference it would make!

If partners in my marketing system are honest, give me fair choices, and tell me their needs, I will do everything possible to meet the needs they have.

This means consulting on major changes... and letting my farm know well in advance if policies are changing.

The CWB is by far the worst performer as a marketer we deal with, they make our multi-national grain companies look like boy scouts.

EPO's
Pre Priced Contracts;

All pricing tools are used to build a CWB capital fund, at our farm's expense.

I thought Federal Income tax was supposed to be paid after expenses... not on gross grain sales like the CWB does!