What the CWB FPC basis should be.

[bgmb]

Its that time of year again. With the first business day of march fast approaching we will soon see the CWB FPC "basis"

Here's what the basis should be worked back to southern Manitoba using North Dakota cash prices as a benchmark for new crop values.

New crop cash price in ND
4.90/bu USD
5.70/bu CDN

CWB Price
231/tonne in store vancouver
180/tonne or 4.90/bu on farm manitoba

5.70-4.90=1.20/bu

The CWB FPC basis should be about $44/tonne or 1.20/bu plus storage and interest costs!

We all know very well the basis will be nowhere near what it should be.

analysts are predicting anywhere from
-15 to 15 $/tonne. I'm not even going to guess what the premium will be but I know for sure it won't be more than 20/tonne

So I'm going to stick my neck out in advance and ask all you CWB fans out there, WHERE ARE THESE PREMIUMS YOU SPEAK OF?????

[SASKFARMER3]

In a open free North Dakota farm.

[charliep]

I suspect the 2007/08 FPC for CWRS will be in the $15 to $20 over range on Monday but will know better next week. Using yesterdays Dec 2007 BPC of $231/tonne, that would put the new crop FPC in the $245 to $250/tonne range (port). All this is based on historical levels where the CWB has started the contracting programs and a lower protein northern hemisphere wheat crop. Wouldn't guestimate more than that because the real numbers will be out early next week.

[JohnKenneth]

if the fpc is going to be that high, then wouldn't the pro need to be in the same ballpark? if not, what's their justification for paying so much more to people who will cash out than those who stay in the pool? from what i've seen in the past they tend to favor the latter, not the former.

i sure hope you're right, but in most years they tend to be pretty conservative in their first pro. almost all the wheat analysts i read are no longer bullish either, suggesting a lower pro than what current wheat market prices reflect.

my forecast: $-10/t basis, $215/t pro.

[charliep]

Hate to forecast anything that will be published/available in three days. I will note there is at least some carry in all three wheat futures markets out into new crop. From there is a 100 % basis forecast/game. That relates to the first posting whether the PRO is an accurate representation of the market or something else. Also impacts CWB delivery patterns May to July.

[bgmb]

Ha Ha
This is exactly it, they don't want to make the pool look bad this is why they faded the basis last fall and that's why they will come out with an undervalued basis this spring.



I really have no idea where it will come out but I'll be surprised if its over 10 and I'm certain it won't be more than 20.