Sign/First Look at Pricing Procedure for New Daily Pricing Contract Starts Today

[charliep]

Just to high diggers point about spreads, I want to highlight the example levels at the bottom of the daily DPC sheet. The high protein spreads are reflective of old crop but are substantially wider (bigger benefit/higher payment) that the PRO levels. The same can't be said for the lower grades/protein. Along diggers thinking, my thoughts are the benefits of this program are likely to be best for farmers who consistently can grow high protein spring wheat. Less benefit for areas that normally only get a low protein 1/2 CWRS or 3CWRS. CPS/other wheats will be a crap shoot as I am still not satisfied on the direct relationship between KCBT (hard winter wheat that is close to spring wheats in quality) and our mid class wheats (more noodle quality). This inconsistency has worked for fixed price contracts (separate basis and futures) so I would likely still go this route. Soft white spring wheat is a no brainer - just do it.

For those who like to carry wheat over between crop years/select pricing periods, my understanding is you can use the alternative of delivering old crop, putting on a storage ticket and using the daily pricing contract to price out in August. This alternative has been removed for the fixed price contract. Given the DPC prices are below the 2004/05 PRO, you need to hope for a major rally over the next 2 months. The only other one that has promise is high protein CWRS - assuming the $32.05/tonne over for 14.5 protein holds into August. Your risk is you are being asked to sign a contract without any knowledge of the pricing or spread levels.

[timm]

what is the premium for 14.0% CWRS

[charliep]

The CWB doesn't have a 14 % protein in their sample spreads. Will ask the question. Also whether they will be posting protein spreads by tenths. As a note, they will have actual samples that independently graded so they will know.

Again these are only samples at this point with actual values starting August 2.

[charliep]

Protein breakdown by tenths for sure. No response on premium. My guess is that will have a sliding scale similar to the US. That is, something to the effect of $2/tenth/tonne from 13.6 to 14 protein and $4/tenth/tonne from 14.1 to 14.5 protein. That is a 14.0 would be worth $10/tonne over. Will depend 100 % on US market and where they do the protein splits.