Really recognizing the one thing I hadn't focused on about having so much wheat forward contracted today since we've gone to feed grade on our wheat... delivering feed wheat at a $20 discount on a $260 #2 contract is SOOOO much nicer than delivering at $75 when #2 is $140ish cash price. Got a couple of neighbours now running 8-10% fusarium on SRW who've been sent home with their crop in hand.
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Did you price open market or Ontario Wheat Board.
Will note the 2009/10 fixed price contract is off about $75/tonne
(December) from the highs. No competition for the CWB so no reason to
fix grade/protein spreads at the time of signing a contract. Feed wheat
and CWB contracts are a particularly painful experience in the west.
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Don't know if it will be of interest to you dalek but here are current prices for soft white spring wheat (as close as we get to SRW).
Current price contract 1CWSWS (not sure on protein but am going to assume a 9.9 to 10.8 %) is about $153/tonne. This is port based so you still have to deduct freight and elevation - about $53/tonne Alberta. that is $100/tonne if you sign an fpc today and deliver local elevator.
If you had a grade of 3CWSWS or Canada feed, you would deduct an additional $27/tonne. $73/tonne elevator Alberta. If you had sample CWSWS on account fusarium, the deduction would be $50/tonne or $50 in a farmers pocket. The deductions are based on CWB initial payment spreads (the way the program works) and the CWB has the ability to deduct additional amounts for feed grade (don't in the case of CWSWS but they take an additional $3 to $9/tonne off other classes).
I won't go through the PRO as still July and the forecast likely has about $20 to $30 to drop next Thursday.
You can compare you and your neighbors price to that available in western Canada.
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hopperbin
First I have to check your question to see if there was a freudian type slip.
I assume you meant how the PPO contracts worked for the farmers who
chose to use them and not the effectiveness of the programs in terms of
the CWB. If this was the question, then we will not know the answer until
next February when the CWB releases the full accounting for the PPO
contracts and the implications for the contingency fund. Indications are
the CWB profited from the PPO contract to point the contingency fund is
back in the black - rumors only but needs to be put in the context of
much lower volume usage in 2008/09.
For a farmer perspective, your results relative to the PRO need to judged
in terms of your price timing decisions.
The PRO from 2008/09 is $304/tonne port (1CWRS 13.5). The FPC over
the period March to July 2008 varied anywhere from $290 to $435 (Mar
2008) with a top end of $360 likely more realistic pricing opportunity.
Both the FPC and flexpro crashed thereafter starting in August 2008. The
FPC/flexpro ranged more in the $250 to $280/tonne range thereafter for
the remainder of the actual 2008/09 crop year - well under the $304
promised via the PRO.
More simply, a farmer likely beat the PRO price if they priced prior to
August 1 2008 and at a substantial discount if they used one of the
programs to price during the actual crop year.
things to look at.
http://www.cwb.ca/public/en/farmers/producer/historical/pdf/2008-
09/2008-09fpcbpccharts.pdf
http://www.cwb.ca/public/en/farmers/producer/historical/pdf/2008-
09/2008-09flexprocharts.pdf
New crop - provide the graphs and you can come to your own conclusion.
http://www.cwb.ca/public/en/farmers/producer/historical/pdf/2009-
10/2009-10fpcbpccharts.pdf
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On the freudian slip front, you might want to read page 14 of this week's Western Producer (August 20), you can see comments on the PPO contingency fund which is apparrently back in the black. Will be interesting to see where the money came from in the final report (cash trading feed barley, EPO premiums, wider basis on fpc, profits on the flexpro program, etc.
Also note Brian Otto's letter to the editor on page on barley - a well written article that asks some good questions. Will leave malt barley alone (dealt with better in the editorial that I can) but I have to raise some of the frustration on the cash trading of feed barley. I hope I don't see a line in the CWB annual report that shows profits on feed barley sales transferred to the PPO contingency. I have to highlight the moral issue of wealth transfer and the impact of poor market signals on the domestic feed market.
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Sorry for taking off topic dalek but have to admit I find the mechanics of CWB programs interesting/like to roll up my sleeves and tear things apart.
So the CWB pay off a 30 mln deficit in the PPO contingency fund. From the year end report, western farmers used about 2 MMT of PPO programs in 2008/09 (about 600,000 tonnes of FPC, 1 MMT BPC, 250,000 ish flexpro and finally 300,000 tonnes plus/minus EPO). Everyone who participate in the 2008/09 PPO programs contributed about $15/tonne to the overall reduction in the contingency (not counting cash from other sources like cash sales and interest earnings) or 40 odd cents/bu.
PPO programs amounted to over 6 mln tonnes in 2007/08 (including 650,000 tonnes of DPC program).
Apologize for being off topic but don't want to start another thread.
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As a heads up, one place farmers really need to pay attention in the coming settling of accounts for PPO/pooling years is malt barley cash plus. The accounting for the cashplus is not done separately but rather in the overall contingency fund. There needs to be strict accounting and audit trail to be sure all the extra cashplus money (your last 5 to 10 % benefit) is distributed to the people who used the program and not lost in paying down the contingency fund deficit.
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