Guesses on First 2008 PRO/FPC Basis

[charliep]

Thoughts on what the CWB will announce Monday.

1 CWRS 13.5 - PRO in the range of $375 to $385/tonne port. First FPC basis $15 to $20 under Dec. MGE.

1CPS/CWRW - PRO in the range of $350 to $360/tonne port. First FPC $30 to $35 under Dec. KCBT.

1 SWS - PRO in the range of $360 to $375/tonne port. First FPC basis in the range of $10 under to $10 over Dec. CBT.

1CWAD 13.0 - I will put my guess at a $25 to $35/tonne premium over spring wheat ($400 to $420/tonne port). FPC discount $40 to $50/tonne.

Anyone else willing to try and forecast.

[charliep]

Will note that the FPC values could be above the PRO. The signal from the CWB would be that current prices are good and there is risk that actual 2008/09 pool returns could be lower.

Will note the interesting situation the CWB finds themself in. They are forecasting to provide market signals. They have to be able to run their pricing programs and hedge their risk on PPO accounts. From the annual report, they find as much basis risk as they do futures. Their policy is to manage both the sales program and their risk management strategy across a whole pooling year with some pretty strange impacts if farmers choose to price significant amounts in certain time periods.

When you get the numbers Monday, will they reflect a CWB forecast you can use in budgeting or a value the CWB is comfortable offering in terms of their risk management strategy?

[Ron]

Sure Charlie, I guess 80% of whatever the US value is. Thats our premium. (at least they are consistent with it)

Its to early for a beer but its never to early to say

SCREW THE CWB

[Zaphod]

I would guess about about $50 per tonne lower than your estimates. The CWB will be as nervous as a long-tailed cat in a room full of rocking chairs.

Lee, are you going to be at Grainworld this year?

[bgmb]

PRO HRSW 350/t
Basis int the -20/t -30/t range

[parsley]

Lee is on the planning committee.

[charliep]

Ron

To be fair, I have to convert your 80 % into a price. Recent article put N. Dakota new crop at $10/bu or $367/tonne. 80 % is $8/bu or $294 central Saskatchewan. Add in $56 to make a Vancouver price and that results in $35/tonne - same as bgmb.