Pricing strategies this years wheat crop

[craig]

I have been trying to do some crop planning for 2006 and need some input. I am making the assumption that if the U.S. winter wheat crop condition continues to decline we will see some new crop sell opportunities in the next while. I also have the concern that a rally will shift more acres in Canada and U.S. into spring wheat. So if this plays out what are the options. Dos this favor CPS red over spring wheat using fixed price program? Can we play price spreads between wheat grades on the futures market? Do we sell U.S. futures if pricing is attractive before fix pricing opportunities are available? If the FPC was available for new crop now what kind of prices would we be looking at? I'm currently planning seed purchases and this has a bearing on what direction I go. I must admit I consider myself a reasonable marketer yet I have a hard time sorting through all the options we have or don't have.

[charliep]

Have to admit I have neglected your question (maybe hoped someone else would step up). Would agree there is some optimism in the wheat market with the comment that North America - although still the largest exporter - is becoming less important in determining world wheat price direction. New crop fixed price contracts are likely to be down on the higher protein hard red spring with the mid quality/lower protein stable. On the spring wheat wheats that are DNS related, I would use the converted December 2006 plus $20/tonne as a starting point for 1CWRS 13.5. Less sure about the basis for classes that are related to KCBT and CBT.

Your tool at this point to lock in a price is sell futures and do an EFP (exchange of futures for physicals) with the CWB in February. Not recommending - just suggesting this could be done.

I also note that the Daily Pricing Contract worked out well for prairie spring, winter and extra strong this year. Will be interesting the CWB takes to this contract in the coming year. Were CWB contracts mentioned at any of the recent Combine to Customer meetings?