Sorry for the delay but I have been taking a bit of a break from Agri-ville to let others have the opportunity to speak.
Your last question is the right one - that is how does the CWB establish the grade/protein/class spreads.
The price the CWB sells for/spreads used are determined by the market. The market could be Portland/Australia for for S.E. Asain sales, US Gulf/Argentina/EU for S. American, the EU/Australia for middle east sales, The process the CWB sales uses in selling grain is no different than that used by grain companies. Without going into details, the spreadsheets that are used to doing CWB pricing calculations are no different than that used by a grain company.
The real question is that after money is deposited in the pool, how is it distributed to farm managers. In a brief answer, the CWB looks at the price relationships in the different markets it sells into over the whole year versus a given day or a given market. As an example, protein spreads are an average value for the whole year (starting with a forecast relationship in the PRO and ending with actual values at the end of the pooling period). The US market is the main protein pricing point (keeping in mind spreads on HRW may differ from that of HRS) but the CWB will also look at pricing in other markets.
For classes, the CWB has to look at price relationships between the wheat we produce and that of our competitors. As an example, our medium quality wheats (CPS, HRW, 3CWRS) are not sold so much in competition with US but also Australian, Argentine and EU wheat (e.g. Iran, most of S.E. Asian). The spreads are again averages over the whole pooling period and have to reflect the pricing relationships in all markets.
An interesting challenge I will throw back at you is how pricing signals will come back to farm in a none CWB world? For example, Iran comes to Canada/the trade for 1 MMT of wheat that has to meet certain specs (basically 2 CWRS with 3CWRS or 1/2 CPS at set discounts). The competition is Australia and Europe.
Your last question is the right one - that is how does the CWB establish the grade/protein/class spreads.
The price the CWB sells for/spreads used are determined by the market. The market could be Portland/Australia for for S.E. Asain sales, US Gulf/Argentina/EU for S. American, the EU/Australia for middle east sales, The process the CWB sales uses in selling grain is no different than that used by grain companies. Without going into details, the spreadsheets that are used to doing CWB pricing calculations are no different than that used by a grain company.
The real question is that after money is deposited in the pool, how is it distributed to farm managers. In a brief answer, the CWB looks at the price relationships in the different markets it sells into over the whole year versus a given day or a given market. As an example, protein spreads are an average value for the whole year (starting with a forecast relationship in the PRO and ending with actual values at the end of the pooling period). The US market is the main protein pricing point (keeping in mind spreads on HRW may differ from that of HRS) but the CWB will also look at pricing in other markets.
For classes, the CWB has to look at price relationships between the wheat we produce and that of our competitors. As an example, our medium quality wheats (CPS, HRW, 3CWRS) are not sold so much in competition with US but also Australian, Argentine and EU wheat (e.g. Iran, most of S.E. Asian). The spreads are again averages over the whole pooling period and have to reflect the pricing relationships in all markets.
An interesting challenge I will throw back at you is how pricing signals will come back to farm in a none CWB world? For example, Iran comes to Canada/the trade for 1 MMT of wheat that has to meet certain specs (basically 2 CWRS with 3CWRS or 1/2 CPS at set discounts). The competition is Australia and Europe.
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