Pay Attention Wheat Rally/End of the Year Strategies

[charliep]

Just a note to make sure everyone is paying attention to the current rally in wheat (mainly KCBT). Objective is likely to lock the futures side in/let basis slide with the caution there is no guarantee of lower basis this summer/fall. My favorite expression is reward rallies with sales. I like to price a little at a time as the market moves higher.

Vader - I remember you have suggested some ideas in the past about cash pricing at the end of the crop year/perhaps more open delivery opportunities on "C" series contracts.

An interesting paradox on pooling is end of the crop year activity where farmers are tempted to hold inventory into new crop in rising markets and sign the "C" series/dump in falling markets. More end of the year CWB cash pricing alternatives may be one solution to this. This would allow farmers to clean up inventory prior to new crop harvest and generate badly needed cash flow.


This program might have to be backed up by specific inventory/on farm storage contracting programs for specific classes, grades and proteins to meet the needs of premium customers like Japan well into the fall when new crop becomes available.

[Vader]

What I had suggested was that the C series be in a separate pool. Likewise with A and B something like the two feed barley pools we have now. The main idea was that if the market was declining that sales late in the year would not drag down the pool for those who committed and delivered early.

[charliep]

Just curious as to why allowing some forms of cash pricing/delivery allowance to clear the market for non critical classes/grades would be a bad? The CWB offers a reasonable slate of alternatives at the beginning of the crop. Why shouldn't some innovativeness be shown at the end of the crop? Just trying to sort out the religion and philosophy of CWB (both sides being equally frustrating) from the business of farming and selling grain in a way that meets a business managers needs(cash flow, profitability, storage, risk mitigation, etc.)