Wheat Rally and Basis Contract

[JD4ME]

Curious who if any that visit here are carrying a basis contract on CWRS and at what level they feel they will start pricing into the current rally?, Thoughts on what kinda of legs this rally has ? As of this morning may 06 basis holders with 3CWRS to sell are looking at around .35 cents over the pro. If my numbers are correct that is.

[Ron]

I have used the FPC and EPO contracts, could you explain (in simple terms if possible) how the basis contracts work? I have stayed away from them because of the complexity (to lazy to figure it out?)
Thanks

[sawfly]

i took a 500 tonne basis on july minn. it was oct 31 so i lucked into the best basis. $1.01 or 1.03
i locked in 1/2 2 days ago. and hopeing for 4.50 minn. to lock in the rest.
depending how much the pro goes up i may not be much ahead. trying to figure out how much the board has sold at lower prices, compared to what they will sell at higher prices.
there is good info and charts of past years at the board site. it takes a bit of study, and some elevator guys dont explain it real well either.

i was hopeing to have it down pat before the end of feb. when the new crop ones are available. it would be nice to lock in a break even or profit on something.

[sawfly]

Ron

the basis contract

No1
the market its the US market that trades a simmilar grain. for HRSW that is minnapolis dark northern spring wheat 13.5 protien equals our no. 1 13.5 protien.HRSW

you pick a month. for new crop lets say Dec. Minn. its close to $4.25 U.S.now, convert to cdn. $ say $4.90 cdn. then add the basis , any where from .25 to 1$.
No,2 so $4.90 plus basis eg. $1 = $5.90 then subtract your frt. & hanling eg.$1.40 = $4.50 your net.

No.3 if your grain is a lower grade you would get a discount same as any the regular pool

you can sign up tonnes , on the basis or the price first
theres a few more things like storage payments and rolovers etc.

[charliep]

Never hurts to sell into a rally. A friend from GMS/UGG days (Ken Ball) always told me to reward rallies with sales. If the market goes higher, sell more.

Weather has the attention of the market right now but who knows. Winter wheat is like a weed that is impossible to kill. Having said, conditions are less than ideas in Texas and Oklahoma. Europe will be interesting with all their cold weather althought snow is Canadian (seems we have a European winter and they have a Canadian one). March is the critical month as crop breaks domincy.

The CWB website has a good explanation of their programs including basis contracts.

[JD4ME]

Charlie


I agreed with your sentiment on rally's the markets have been most profitable the last two years during these types of rallys fundamentals have been replaced by fund weather rallys, I sold half my basis contract last night at a .47 cent/ 17.25 tonne premium to the current pro well see how it works out.

[Ron]

can you deliver before fixing your basis? you would get the initial and wait for the rest untill fixing the basis later?