fixed price contracts

**Incognito** · Aug 16, 2007, 00:00

Its gonna freeze hard tonight in places.

Possible outcome:

In a week CWB withdraws from market to assess damage. Wheat goes up $1.00.

In November when they have it figured it out and wheat has dropped $2.00 - make a sale or two - average it out over 12 months and tell everyone you extract a premium.

Nightmare or déjà vu?

**kamichel** · Aug 16, 2007, 09:32

I have locked some in also. Expect the basis to take another bite out of the futures price when the new pro comes out.
About a week or more away. I don't believe the pro when all is said and done will match the current fixed price. We have midge damage to show up here so contracting is high risk for me.

**charliep** · Aug 16, 2007, 12:32

Will also note the CWB adjustment discounts have been steadily getting more negative/uglier. Current adjustment factor for CWRS/CWHS/CWES is $4.25/tonne (Aug. 1 $2.50). CPS (red and white)/CWRW is $5/tonne (Aug. 1 $3). CWSWS is $6/tonne (Aug. 1 $3). Reflects the drag factor of existing sales that have occurred for the 2007/08 pooling year.

Also agree there is risk that an increase in the August PRO will get eaten up by weaker/uglier CWB adjustment factors on fixed price contracts. Can one of our pro single desk guys explain the logic behind the adjustment factor on fixed price contracts?

fixed price contracts