Hey Tom4CWB

[Ron]

I looked at the FPC basis from march 3, 2005 cps red was $3.02/t for dec/05 march/06 was -0.06/t. What has changed? I used your name to get your attention as I know you follow this stuff much more than most of us but if Vader wants to reply I would like to hear his theory as well.
March 3, 2006 FPC 190.16-3.02=187.16? Whats not to like about that number?

[TOM4CWB]

Ron;

Effective: March 03, 2006 2:30 p.m. CT
Expires: March 06, 2006 7:30 a.m. CT
The next pricing schedule will be available at 2:30 p.m. CT on March 06, 2006. Winnipeg is located in the Central Time (CT) zone and all deadlines are quoted as CT.

Futures Prices - Kansas Hard Red Winter
Dec. 2006 $4.59 $190.16 $5.18
March 2007 $4.61 $190.45 $5.18

No. 1 CPSR, February 27, 2006
(reference grade) PRO
$159.00 $4.33
Fixed Price $169.30 $4.61

Say $120/t or $3.27/bu

Hmmm

[farmboy044]

with the wheat market down as much as it is this evening, i will be watching in the morning. at 190 futures price for cps, i will do the futures contract and lock in the basis later.
190 -3 (estimated basis sometime later)=187 less 46 (elevator basis for me)= 3.84 net per bushel.

regards

[lakenheath]

Farmboy,

You are assuming that the basis will strengthen to zero?

[charliep]

I would just note the change to the way basis will be reported in 2006/07.

This year, the CWB will separate the portion of basis that reflects the expected relationship to the CWB payments for the remainder of the year from that of actual sales prior to the date you signed the basis contract.

The fixed price contract is related to the expected pool return price for the year (relationship with the PRO). The expected pool price has a portion that is sales already on the books (actual sales) and the CWB forecast for the remainder of the year. This time of the year, there would be no new crop sales made by the CWB (basis is 100 % forecast). As the fixed price contract moves toward October, there are more sales on the books and this will show as a plus or minus adjustment this fall.

I can't see CPS basis stay at $20 under but there is no guarantee it will move to $3 under either - that would have to come from high valued sales relative to the PRO during the first quarter of the 2006/07 crop year.

In my humble opinion, the CWB would be better to go to cash pricing/hedging off one month outside the pooling system - much less complicated than the current one. It should provide truer price signals of the non CWRS classes.