Pricing Durum into 11/12 cropyear

[farmaholic]

The 10/11 PRO for #1 14.5px Durum is $5.50/bu. PRO for same grain in 11/12 is $10.42/bu. That is quite a spread. The cost of the New Pool Pricing option on 10/11 contracted undelivered grain that could be priced into the 11/12 pool is only(tongue in cheek) $69.75 a tonne. WOW. I realize this is aweful early to put much faith into a PRO for the new crop year. Didn't look at the other options....... Yet.

[charliep]

Asked the same question sitting in the Grain World audience. This market signal will shutdown deliveries in a period when they are needed to fill sales at high values - particulary if there if there is small amounts of higher quality from previous crop years. the signal should be to sell what durum you have in the bin this year and if you are optimistic about durum prices in 20011/12, increase acres.

The CWB needs to be creative in offering cash pricing at the end of the pooling year or have two pooling periods.

[charliep]

Interesting enough, there are no fixed price contracts offered for durum at the durum at the current (old or new crop). You can lock in a relatively low cost EPO for old crop but not near the current selling price - EPO is based off the PRO which has a significant amount of pricing in it already and no way of encouraging remaining supplies to come up the elevator driveway before July 31. More sales at current values(potentially increasing over the next 4 and 1/2 months) would increase pool returns somewhat (again a blended price).

[highwayman]

Just to clarify the current pro for durum in the 2010/11 crop year is $8.68/bus in store ThunderBay. Difference new crop Pro vs. old crop pro is $63/tonne yet buyout to roll forward is $69.75/tonne. Go figure!

[checking]

That number should make you wonder who the highwayman is!

What warms me up is the comment by Ed White that "most wheat grades and classes are slightly higher for 2011-12, but durum and malting barley are much higher satisfing farmer hopes to see the good world prices they have heard are in the market.

Do you durum growing guys and gals really feel satisfied with hopes, or is that a bit of flowery journalist poetry?

[farmaholic]

Here is the email I received comparing the 10/11 and 11/12 PROs did I make a mistake in the comparison in the itial post? I don't know if it will display correctly.


Some upcoming dates

Feb 28: 2011-12 BPC basis offered

Feb 28: 2011-12 FPC sign-up begins

More dates on the online calendar

Meet your farmer-elected CWB director @ Farmer Forums

The CWB is your business.

Meet your farmer-elected CWB director and a senior CWB manager at a Farmer Forum in your district. Meetings run between March 7 and 17.

Learn about what's on the horizon for the coming year and share your views on CWB programs and services. Help shape your CWB's future.

Not sure who your elected director is? Check the district map page.

View the list of meetings and register online now.




--------------------------------------------------------------------------------

The Bulletin

February 28, 2011

At a glance

The CWB today released its first Pool Return Outlook for the 2011-12 crop year, immediately following the wheat-market outlook at the GrainWorld 2011 conference in Winnipeg. With the release of these projections for farmers' pooled returns from the 2011 crop, sign-up now commences for several programs related to the new crop year, including:
Pricing options: the 2011-12 Fixed Price Contract (FPC) and the basis portion of the 2011-12 Basis Price Contract (BPC). Full information can be found at www.cwb.ca/ppo . Sign-up for these programs runs until January 31, 2012.
New-pool pricing for farmers who may be considering pricing some of their 2010-11 deliveries of wheat or durum into the 2011-12 pool. Producers are reminded that a per-tonne fee is assessed for new-pool pricing and advance notice is required. The program fee offsets the impact of the uncertainty that is created for pool size and pool returns when grain is switched from one year to another. The fee is calculated based on the difference between the old and new crop year PROs, current average sales values and risk. There is also a $25 administration fee. More information is available at www.cwb.ca/npp .
GrainWorld 2011, Canada's premiere grain-industry conference, continues today and tomorrow at the Fairmont Winnipeg. The event features in-depth outlooks for a range of agricultural commodities, the Canadian and global economy, the weather and ocean freight. A line-up of outstanding speakers, including Royal Bank economist Paul Ferley, Scotiabank's Carlos Gomes and Export Development Canada's Geoff Stone. Bill Lapp, President of Advanced Economic Solutions, looks at U.S. ethanol policy and global commodity markets. Veteran broadcast journalist Don Newman will provide a view from Ottawa, sharing his thoughts on the nation's politics. More information is available at www.cwb.ca/grainworld .
Farmers are invited to attend a CWB GrowerLink conference, Mar. 2 in Strathmore, AB and Mar. 3 in Unity, SK and Rycroft, AB. GrowerLinks provide comprehensive market information in a full-day session. Each conference costs $20 and includes lunch. For more information, visit www.cwb.ca/events .
Farmers can receive current market and economic information at the CWB's Farm Market Outlook in Moose Jaw. The conference takes place Tuesday, March 8 at the Heritage Inn. The cost is $30 and includes lunch. Call Farm Business Representative Patrick Weatherald at (306) 751-2694 to register. The full agenda is online at www.cwb.ca/events .
The CWB has created a new three-minute video about snowpack on the Prairies and how it may affect this year's spring seeding. In the video, the CWB's director of weather and market analysis, Bruce Burnett, takes viewers for a walk on his family farm near Birtle, MB for a first-hand look at the snow. The video can be found on the CWB's YouTube channel at www.youtube.com/canadianwheatboard or accessed from the home page of www.cwb.ca .
Market Prospects, a TV series produced by the University of Saskatchewan's Department of Bioresource Policy, Business & Economics, airs this Saturday, Mar. 5, on CTV Farmgate. This weekend's program takes a look at wheat and pricing options with CWB Chief Operating Officer Ward Weisensel. The program airs at 12:30 p.m. and 6:30 p.m. on CTV Saskatchewan and on satellite television on Shaw Channel 29 and Bell Channels 235 and 249. It is also available online at www.marketprospects.usask.ca


--------------------------------------------------------------------------------

Strong Grain Values Continue in First CWB PRO for 2011-12

February 28, 2011

Winnipeg -- The CWB today released its first Pool Return Outlook (PRO) for the 2011-12 crop year.

February PRO February PRO
2011-12 2010-11
(published Feb. 22, 2010)
- In store Vancouver or St. Lawrence -
Tonne Bushel Tonne Bushel
Wheat
1 CWRS 14.5 365.00 9.93 245.00 6.67
1 CWRS 13.5 352.00 9.58 236.00 6.42
1 CWRS 12.5 335.00 9.12 224.00 6.10
1 CWRS 11.5 321.00 8.74 213.00 5.80
2 CWRS 13.5 345.00 9.39 232.00 6.31
2 CWRS 11.5 314.00 8.55 209.00 5.69
3 CWRS 13.0 322.00 8.76 211.00 5.74
3 CWRS 304.00 8.27 203.00 5.52
4 CWRS 278.00 7.57 185.00 5.03
1 CWHWS 13.5 352.00 9.58 236.00 6.42
1 CPSR 299.00 8.14 206.00 5.61
1 CPSW 289.00 7.87 204.00 5.55
1 CWRW 11.0 296.00 8.06 - -
1 CWRW 294.00 8.00 202.00 5.50
1 CWES 322.00 8.76 211.00 5.74
1 CWSWS Select less than 10.5 306.00 8.33 206.00 5.61
1 CWSWS 295.00 8.03 195.00 5.31
CW Feed 240.00 6.53 159.00 4.33
Durum
1 CWAD 14.5 383.00 10.42 202.00 5.50
1 CWAD 13.0 374.00 10.18 197.00 5.36
1 CWAD 12.5 371.00 10.10 194.00 5.28
1 CWAD 11.5 366.00 9.96 190.00 5.17
2 CWAD 13.0 356.00 9.69 193.00 5.25
2 CWAD 11.5 348.00 9.47 186.00 5.06
3 CWAD 13.0 327.00 8.90 185.00 5.03
3 CWAD 322.00 8.76 176.00 4.79
4 CWAD 260.00 7.08 166.00 4.52
5 CWAD 240.00 6.53 159.00 4.33
Feed barley
1 CW - Pool A 257.00 5.60 150.00 3.27
Designated barley
Sel CW Two-Row 337.00 7.34 208.00 4.53
Sel CW Six-Row 320.00 6.97 190.00 4.14

[farmaholic]

It didn't display real well but can still be interpeted. ????????????????????????????????????????????????

[farmaholic]

Here is the 10/11 PRO link

http://www.cwb.ca/dom/db/contracts/pool_return/pro.nsf/WebPRPub/2010_20110224.html?OpenDocument&CropYr=2010-11

Here is the 11/12(compared to the 10/11) PRO link

http://www.cwb.ca/dom/db/contracts/pool_return/pro.nsf/WebPRPub/2011_20110228.html?OpenDocument&CropYr=2011-12

Highwayman is right on the first link but the second link shows a different 10/11 PRO.

Does someone have an explanation for this that I am failing to see????

[farmaholic]

****Face called and set me straight. The comparison is the 11/12 PRO dated Feb 2011 vs the 10/11 PRO "DATED FEB 2010" DAH!!!!! I didn't realize the PROs were dated a year apart. I thought they were comparing the two crop years using one current date. Sorry folks.

[****Face]

Someone had to set you straight!!

[TOM4CWB]

Charlie,

" This market signal will shutdown deliveries in a period when they are needed to fill sales at high values - "

Soooooooo...

I am to assume the CWB gave you a blank stare like you were 'TalkingEskimo'!!!???

Are we just stupid, crazy, or both???

[charliep]

didn't ask the question. Just a comment. I would store for $70/tonne provided I had the cash flow/equity to do it (realizing PRO values are forecasts/not real prices). Having said, that is a long time for any business person to wait for their money. "B" series durum signup will be interesting.

Don't know why the CWB can't offer fixed price contracts on durum right to the end of the crop year. Existing sales are know values in the pool. The CWB can match durum deliveries from farmers against sales values from customers without using a futures market (particularly after the "B" series contract is subscribed). "B" series deadline is March 31.

[charliep]

Any thoughts about what should happen differently.

durum issue to me revolves around the following.

1) Better market signals for farmers so they are able to make better decisions for their business.

2) A tighter relationship between a delivery/contracting decision and price/payment prospects. When a farmer makes a decision to commit delivery, they have a better idea of final price/payment.

3) Better ways for the CWB operations to manage their risk from logistics, price pooling and perhaps cash pricing in a world of no effective hedging systems. Could be more than one pooling period. Could be a cash plus system. could be something else tied to guaranteed delivery contracts.

[highwayman]

How will the CWB now deal with the thousands of tonnes of uncontracted durum sitting in farm storage that farmers will obviously like to deliver for bin space reasons yet will be sold in the 2011/2012 crop year. This grain being uncommitted to this crop year should then have no effect on this years final pooled price. One would assume that the board would like to avoid a similar situation like the one of last fall when they could not attract deliveries to fill the ships that were waiting in port for a number of months. Perhaps maybe a little forsight by the CWB for a change.

[charliep]

The CWB does offer some programs for durum that has been contracted and farmers want to flip until new crop.

the program.

[URL="http://www.cwb.ca/public/en/farmers/payments/newpool/"]CWB[/URL]

Kevin Hursh's comments.

<a href="http://www.hursh.ca/2011/03/high-cost-for-switching-durum-to-new-crop/">Hursh</a>