CWB changes terms of PPO contracts

[charliep]

Contingency fund is $60 mln and not $65 - sorry about that.

[URL="http://canadagazette.gc.ca/archives/p2/2006/2006-08-09/html/sor-dors173-eng.html"]contingency fund maximum[/URL]

This is an important as reflects how the B of D will try to recoup the pain to the overall pools from the 2007/08 crop year by grabbing
money from the contingency after it reaches this maximum in the contingency and directly depositing into the overall pools. Bad on a
whole bunch of different fronts including moving money between pooling years.

[Hopperbin]

If someone can explain the CWRS basis going from June 1 minus .61 cents to Oct.16 plus .51 plus Adj. factor of .15 cents to total plus .66 cents for Oct.16. That is to the positive of 1.27 dollars per bushel over that time period.
If can explain that then try explaining this CWSWS wheat basis June 1 of minus 1.23 to Oct. 16 of minus 1.07 plus .15 cents adj factor to total minus .92 cents for Oct. 16. That is moving to the positive of only 31 cents over that time period.

[charliep]

I ducked your question last time and I'm going to do it again likely
because I don't know but maybe a little because your marketing agency of
which you are a stakeholder should provide this information. You have
noted the open market price but I might ask what western Canada flour
mills are paying and the percentage export versus domestic usage. The
pooling system has nothing to do with price and everything to do with fair
(at least in the CWB operations side) distribution of revenue.

[Kodiak]

So Charlie, has anything changed under the scenario where one locks in a basis only?

Previously, we had to lock in the basis (had to be done by Oct 31 when the sign-up period for BPC's was over) when we signed the BPC. My read of this new wrinkle is now we have to commit the tonnage by Oct 31, but can leave the basis open - and can lock it in with the same times frames applicable as locking the futures portion. Have I read it wrongly?

[charliep]

I didn't read it that way but I could be wrong. If you
could leave basis and futures open, it would
effectively be the Flexpro with 4 extra months to make
a decision (actually even knowing grade), a commited
pricing period and the adjustment factor on the day
you sign. It wouldn't make sense to do it this way but
can't say wouldn't happen - stranger things have been
known to happen with CWB programs.