Combination High Protein Spring Wheat/Fixed Price Contract

[charliep]

Just to highlight again, anyone who has over 14.5 % protein wheat undelivered (doesn't matter whether contracted under an A,B or C series or not), you can collect the storage premium. My understanding the CWB will reduce the amount of 2006/07 contracted wheat you have by the amount you put into this storage incentive program. You also have the choice of crop years you price into.

The latter is important because it opens the alternative of using a new crop fixed price contract for old crop inventory. Because it is a contracting program outside normal contracts/contract calls, this wheat will not impact delivery alternatives for 2007/08.

To talk about what this means to your bottom line, the storage premium is $12/tonne for 14.5 to 14.9 % protein and $17/tonne for 15 % plus. The fixed price contract (2007/08) on Friday was $242.18/tonne (port) plus the initial payment spread between 13.5 and 14.5 protein - the new crop PRO spread is $10/tonne). The old crop PRO for 1CWRS 14.5 is $223/tonne (port). The new crop 1CWRS 14.5 is $238/tonne (port). My math is poor needs to be checked but going this route can put (based on Friday information) $42/tonne over simply selling into the 2006/07 pool and $27/tonne over particating in the 2007/08 pool (not counting cash implications and assuming the PRO forecasts are close to final payments).

[charliep]

Not to clog up the postings so will put the CWB feed barley contract offering on here as well. See quote below. Comments after.

Quote - "Rejected 2006-07 selected Barley eligible for 100 per cent EPO for feed barley in August

Effective Wednesday, August 1, 2007, producers who have their 2006-07 selected barley rejected due to low germination are eligible to sign up for a 2006-07 100 per cent Early Payment Option (EPO) for feed barley. This option will be available until Friday, August 31 at 7:30 a.m. CDT.

To select this option, check the box labelled “Sign up a 100 per cent Early Payment Option for feed barley” in Part C of the 2006-07 Guaranteed Delivery Contract sign-up application for rejected selected barley.

Only barley rejected due to low germination is eligible for this option. Feed and selected barley that is rejected for any other reason is not eligible for a 2006-07 100 per cent EPO after July 31."

The cost of a 100 % EPO on Friday was $1.25/tonne (cheap/indicating effectively zero risk). The PRO was $195/tonne or assuming a $45/tonne deduction, about $3.25/bu with the chance to enjoy payments above the PRO. Price is not competitive with feed market so farmers in Alberta have to be hoping for an additional 25 to 50 cent/bu higher total payment to be competitive with local feed markets.

[charliep]

To add clarity to my babbling, here is the information on the above two programs in todays CWB bulletin release.

July 31 is the last day that the 2006-07 Early Payment Options (EPOs) are available. However, producers who have their 2006-07 selected barley rejected due to low germination will remain eligible to sign up for a 100-per-cent 2006-07 EPO for feed barley until Friday, August 31 at 7:30 a.m. CDT.

The deadline for the Wheat Storage Program (WSP) offered by the CWB is July 31. Last week, the CWB increased the premiums it will pay for No. 1 CWRS wheat contracted under the WSP. Details are available from CWB Farm Business Representatives or by calling 1-800-275-4292.