Hopperbin;
The CWB basis is ficticious.
Get a load of this:
"Offsetting these losses were gains in basis. Once producers
have priced, they have locked in their basis levels. If the
final achieved basis of the pool is different from what
producers locked in, a gain or loss will result. The basis,
which is unhedgable, widened over the course of the
year due to the very tight world grain fundamentals that
became apparent after producers locked in their FBC/
BPC prices, resulting in a gain to the program.
The DPC was introduced in 2005-06. It offers producers
an opportunity to capture daily cash prices based on the
U.S. market. A total of 654 479 tonnes was delivered
to the program in 2007-08. Pool returns paid to this
program were $242 million. After accounting for pricing
damages (offset by contracted values net hedging losses,
interest and administrative expenses), the program had
a net deficit of $18.5 million. The reasons for this deficit
are similar to those with the FPC and BPC programs.
However, the DPC had additional basis risks as it was
based on U.S. elevator prices. During the period of
pricing, the U.S. elevator bids became dramatically out of
line with pricing in the rest of the world, largely because
little grain was available for sale at U.S. elevators. As the
CWB sells into multiple markets, this resulted in a loss
for the program.
Management expects that the revised offerings of PPO
programs as well as the adjustments implemented due
to the previous years’ losses will generate positive results
for the Contingency Fund in the future. In addition,
management has engaged an external consultant to
validate the hedging and pricing adjustments.
Page 62
To uphold the principle communicated to farmers that the
PPO programs will operate independently of the pool,
the board of directors has approved a policy that provides
for repayment of funds to the pools from the PPO programs
when the Contingency Fund is in a positive balance.
Repayments to the pools cannot force the Contingency
Fund into a negative position.
Page 67
Soooo the CWB cooked the books... to make themselves 'look' like competent managers...
What a joke... and it is just the beginning... I will post the next question in another thread...
The CWB basis is ficticious.
Get a load of this:
"Offsetting these losses were gains in basis. Once producers
have priced, they have locked in their basis levels. If the
final achieved basis of the pool is different from what
producers locked in, a gain or loss will result. The basis,
which is unhedgable, widened over the course of the
year due to the very tight world grain fundamentals that
became apparent after producers locked in their FBC/
BPC prices, resulting in a gain to the program.
The DPC was introduced in 2005-06. It offers producers
an opportunity to capture daily cash prices based on the
U.S. market. A total of 654 479 tonnes was delivered
to the program in 2007-08. Pool returns paid to this
program were $242 million. After accounting for pricing
damages (offset by contracted values net hedging losses,
interest and administrative expenses), the program had
a net deficit of $18.5 million. The reasons for this deficit
are similar to those with the FPC and BPC programs.
However, the DPC had additional basis risks as it was
based on U.S. elevator prices. During the period of
pricing, the U.S. elevator bids became dramatically out of
line with pricing in the rest of the world, largely because
little grain was available for sale at U.S. elevators. As the
CWB sells into multiple markets, this resulted in a loss
for the program.
Management expects that the revised offerings of PPO
programs as well as the adjustments implemented due
to the previous years’ losses will generate positive results
for the Contingency Fund in the future. In addition,
management has engaged an external consultant to
validate the hedging and pricing adjustments.
Page 62
To uphold the principle communicated to farmers that the
PPO programs will operate independently of the pool,
the board of directors has approved a policy that provides
for repayment of funds to the pools from the PPO programs
when the Contingency Fund is in a positive balance.
Repayments to the pools cannot force the Contingency
Fund into a negative position.
Page 67
Soooo the CWB cooked the books... to make themselves 'look' like competent managers...
What a joke... and it is just the beginning... I will post the next question in another thread...
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