CWB basis

[disker]

I am shocked, no wait, I'm not. What a load, $15/tonne below long term basis levels. Get ready to here that the wheat market is to high and unpredictable, this excuse, that excuse, blah blah blah etc. I was expecting/hoping for $15/tonne basis but thinking more along the lines we would see $20/tonne with a $15/tonne adjustment factor, pretty close. Must be some calculation factor to keep FPC and pool within so many cents/bushel.
Send out my wheat ballot, my as well save on the postage with the barley vote.

[JohnKenneth]

it's also $15/t above the pro.

not saying it's a fair price, just better than what doing nothing about it looks to offer.

what's the consensus? anyone going to lock in $233-235/t?

[sawfly]

i was dissapointed in the basis, was also hopeing for 15 to 20$.
i have locked in 10000 and plan on another 15.
just trying to cover off the 20% that was not taken on the A contract.
it seems these producer payment options have created a bit of a dysfunctional market.
i wonder what holding 15% of the canadian wheat crop off the market for 6 months is haveing.

in my case, i think the odds are 50/50 that most of the world grows a good crop. prices stay the same or drop 75 cents.

there probably is more upside potential.but im hedgeing against my own advice.

[charliep]

If farmers don't like the basis (CWRS is weaker than those in the past), you still have the alternative of locking in futures only and waiting (realizing may not happen) for basis to strenghthen.

Realize we all struggle in understanding fixed basis in that it relates to the locked in relationship with a pool return outlook and the fpc. This compares to a cash price that is related at the end of the day to the value a customer is willing to pay.

On this last point, the daily price contract will be something I will be promoting as a part of everyones strategies this spring. Hopefully the CWB increases the DPC volume to at least 1 MMT. I hope the program hits its maximum volume in early June.

[poorboy]

I am lead to believe that the basis most places is weak on wheat. Are not most US elevator basis levels also much wider than normal, suggesting that world wheat prices are actually a ways below futures levels.

The CWB basis levels this year are poor compared to historic numbers, but may be a real reflection of world trade.

I personally believe that the basis levels will improve sometime before the end of the year and allow an opportunity to lock in a higher value. Compared to the past few years the lock in value for the futures and CDN$ looks attractive.