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Watch Thurs. November CWB PRO Forecast

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    Watch Thurs. November CWB PRO Forecast

    Just a note to get everyone to follow next Thurs. CWB pool return outlook. It will be an interesting one from a policy/signal standpoint.

    The first note is the US wheat market has dropped off by about Cdn $20 to $25/t using the posted prices for the producer pricing options (can post the locations on the CWB site if some one requests).

    Is the PRO simply a tally of wheat/barley that has been sold to date plus current futures prices plugged into the sales program? If this is the case, I would look for the next wheat PRO to drop by $10 to $20/t on Nov. 28.

    Or are the prices more based on CWB pricing forecasts for the unpriced portion (what the CWB has sold is already there in both cases). I would look for the CWB PRO to be down in the neighborhood of zero to $10/t in this case.

    The real interesting blend of prices going into the pricing pool remains:

    1) How much was forward priced last spring?

    2) Did the CWB take some steps to unload or replace these positions over the summer? Do they still have these positions on the books?

    3) How much of the higher pricing opportunities in Sept./Oct. did the CWB capture by selling (either cash pricing or hedging)?

    4) How much western Canadian wheat is still left unpriced in the pools? What is the CWB sales strategy given the information available on market outlook and likely farmer delivery patterns? Optimism around outlook has to be tempered by the inverse in the market/a likely more bearish situation next summer as a bigger world wheat crop starts to impact prices (assuming decent world weather).

    Stay tuned.

    #2
    I should note the $20 to $25/t decline is from the Oct. date. The markets are down by closer to Cdn $50/t from the US futures highs.

    Another interesting note is to look at the structural change in the market. In the early 1970's (yes I can remember back that far), it was the Soviet Union that drove prices up reflecting their policy to feed the people (years of the great grain robbery. They are still paying Canadians for this grain. A tongue in cheek comment but western Canadian farmers are still befitting from these sales in terms of the interest earnings to the pools.

    Today, the former Soviet Union/Eastern Europe are western Canada major competitor in many markets.

    What a difference 25 to 30 years makes.

    Comment


      #3
      Charliep: the pro will be favoured by the coming election. Guess which way if any the pro will move. My guess is it will move none or very very little.

      The CWB is Politics, not a market indicator.

      Comment

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