FlexPro versus Fixed Price versus DPC (May it rest in peace)

[charliep]

Reviewed the FlexPro and noted again that exactly 25 cents/tonne lower than the FPC. With the note that you have to sign an FlexPro now and can't price until Aug. 1, here are a couple of notes.

Your big difference between the FlexPro (it would appear) and the FPC is no adjustment factor for grain - this can be a positive or a negative. In FlexPro, the basis will continue to change daily after October 31 versus having to sign a basis contract at least prior to October 31 to keep your pricing open.

Have to express the frustration that both the FlexPro and the FPC are completely invisible/non transparent. The CWB is the only game in town so they will protect their interests (including potentially topping up the contingency fund) versus a product based on customer needs. The DPC (may it rest in peace) was not perfect/transparent but at least could be compared to an actual US cash price. The CWB operational issues around risk management (cost and effectiveness) exist in the FlexPro, the FPC and the now defunct DPC.

Is anyone contemplating signing a FlexPro? With the caveat the marketing gods are likely to strike me dead with lightning for even suggesting signing a contract that is this wishy washy on the pricing side/has no basis attached, I would suggest signing a B train or 2 just to test/see how the CWB will handle.

[Kodiak]

Everything the CWB does happens inside the black box. Pools. PRO's. FlexPro. FPC’s and BPC's. So the issue of lack of transparency is there - no matter what. But for me, lack of price transparency is only part of the problem. The other is once you sign an unpriced CWB PPO, you open yourself up to risks that can’t be offset. No different than the old days when farmers would leave non-board grains “on storage” without even a basis contract. “Over a barrel” is probably the best description of that situation. Someone might correct me, but thankfully I think that practice is a thing of the past. Even the Grain Companies discourage it.

My strategy has been to pick the PPO that presents the least amount of what I call “CWB risk”. Most times for me that's the basis contract. It leaves me the most amount of pricing flexibility AND control. Once I’ve signed the BPC the pricing, rolling, and even re-owning via Minneapolis futures is completely in my hands and under my control.

They can screw me over once - in the basis and the adjustment factor - but after that I’m subject to no further CWB risk.

[bucket]

I still think in the current market/ weather conditions the best thing to do is not sign any contracts with the cwb. NO fpc,dpc,flexpro,grainflo etc. - none of it wait till the cwb wakes up and finds a less than stellar crop and prices go through the roof. They have to come back with better prices to get my grain this year. I am still wondering how exactly they will fill their commitments with no one signing contracts. How will they get the grain????

[parsley]

They can buy foreign grain and import it.

Parsley

[TOM4CWB]

Bucket...


"How will the CWB get your grain?"

How about when you need to pay for 1500/t p205? Nh3 $1600/t

Diesel is $7 /gal?

glyphos is $12/l?

And the option is a 'flexpro' that gives you a daily EPO... that matches the FPC... till Aug 1... when the CWB starts taking discounts off the growers for 'not pricing early enough!'

Tell me how you will get through the 'pool' to the real world of international prices... when a $500/t buyback is the option when the market rallies?

We are really being asked to hold over 1 years production... THEN we will be able to control the risk more effectively on the FPC/Flexpro!

Can you afford to do this?

You must have a printing press wound up... LOL... if you can!

At least there is a shower cooling the crop off tonight... almost as GOOD!!!!

[parsley]

Maybe the CWB will purchase grain from Quebec Single Desk to fill their needs. Maybe they've already been doing it.


Parsley

[bucket]

tom

I know my theory is out there about not signing contracts with the board. Its a chicken egg theory. Or a blinking match but with stronger prices in other commodities couldn't the board come with better prices?

Keeping one years production is an option to be able to price on a flexpro where you know quantity.

But if you are going to store grain for a year why not get the risk reward and be able to price in the open market and choose when to sell. Flexpro commits tonnes it doesn't price tonnes. I would rather be able to price my grain when and where I wanted if I am storing it.

[dolin]

half of 09 wheat crop will sell outside of quebec single desk to agrinature

[parsley]

In the meantime, certified organic farmers in the West, are forced to do a buyback if they want to sell to an Ontario or Quebec mill.

Quebec bypasses their single desk, is that what you are saying? What is their arrangement, do you know?

Parsley

[TOM4CWB]

Parsley,

In Quebec... the 'single desk' in maple syrup for instance... is for overage that growers can't sell to the traditional high price retail markets they have.

When we did our study in Montreal... it was clear the single desk was there to stop dumping... and to encourage individual marketing initiative... where growers had good opportunity!

It is sad... the CWB has only partially understood the meaning of serving grain growers... as to mean they are to help and serve our needs... NOT turning us 'designated area' growers into servants that make life simple and easy street for left wing CWB management & politicians!

[dolin]

agrinature want buy wheat whitout n.p.k.and herbicid on it.wheat growers sign contract with agrinature.they get more money for the wheat. sorry year is wrong not 09 but 08