What makes our prices?

[TOM4CWB]

Vader;

DTN just had an article on Index Funds.

DO you produce grain and or livestock?

Then we should care who else is buying or selling corn, cotton, heating oil, lean hogs, live cattle, natural gas, soybeans, soybean oil, sugar, unleaded gasoline, or wheat.

Now we have more players wanting to buy our commodity, at least in the futures markets.

Index Funds.

More than $100 billion, today, in noncommercial activity in commodity markets has changed the way they function. It was about $6 billion in 1999

lndex funds may actually mean new opportunities for farmers with crops or livestock to market.

New offerings called sub-index funds, are like index funds already offered.

They bring new money into the commodity markets. These sub-indexes are traded in the equities markets.
They are classified as exchange-traded funds, (ETFs); money going into them is typically being taken out of stocks and bonds, as is the money going into the broader index funds.

Sub-index funds represent a way to trade commodities without having to buy into large contracts and with no risk of physical delivery. For us as producers of the underlying commodities, they also mean bigger price swings in the futures markets.

So if our grain prices don’t track, what you think are the fundamentals… don’t be surprised.

The trading of the Index Funds affect every grain we grow, either the input cost, or the price of the grain or livestock we produce itself.

Index funds create focused ebbs and flows of money going into or coming out of commodities. This buying and selling power will exaggerate price movement and volatility in both directions.



Everything… is not as it seems… from the seat of the tractor as we seed our crops, or produce our livestock!

Vader, what risk management strategy does the CWB use in the pooling accounts... to maximise our returns from these new marketing alternatives?

[TOM4CWB]

Vader;

The observation from the CWB fusarium non-premium, CWB Hard white wheat discount to CWRS situation; why would I believe that the CWB "single desk" extracts anything but an average pooling price; pooling system on basis... and contingency taxes on pricing options?

How does any of these functions connect my farm closer to the customer... and allow me to value add and become a better grower with the CWB wedged in the middle pooling everything?

With over $120 billion flowing through our ag produce pricing systems... what makes the CWB able to do anything but average a few pricing signals?

THe "Single desk" pools are a problem for us... and distort my market place...

Why shouldn't we growers who understand the market... benefit from that understanding?

Should a simple vote by by neighbours who don't know, or who don't want to know marketing... bind my talents and those who have gifts in understanding the market place? How exactly is this fair?

[cottonpicken]

Tom,if you wanted to prove the cwb is bad for farmers could you not look at its forward sales.The commodity bull market that we are in is far from over and has not even started in the grains.
If the cwb is selling our grain 12-18 months out that would be prove the cwb is not in our best interests.As a full time market geek I can tell you that the etfs are nothing but good for us. There is a lot of money floating around the globe and it has only just begun.

[TOM4CWB]

cottenpicken;

Sales timing is key to a profitable sales plan... selling decisions that settle prices at the bottom of the market are not acceptable.

There are tools that allow daily sales to customers; when the sales value is determined years before... or after for that matter.

These are the tools that the CWB can concentrate on providing... that the AWB has done a much better job generally providing; as has the OWPMB.

I have to believe we are missing a big chunk of revenue... and professional money managers would be out on the street; if they managed their funds the way the CWB manages our pool accounts.

We are paying $70 million in CWB admin... and what are we getting for this?

Lower prices that are pooled to discourage production of the produce we grow... forced holding of inventory at a loss...