CWB: DPC vs FPC

[TOM4CWB]

Charlie,

I just did a quick check today:

DPC 1CWRS $251.16/t
FPC 1CWRS $251.80/t

DPC 1CPS $225.53/t
FPC 1CPS $229.19/t

Go figure... the CWB is telling us the US price for CPS is lower than what it is offering here?

Shows you just how absurd the CWB system is that created these pricings.

So taking a DPC was NOT the thing to do after all!

A Monopoly at full glory and in its zenith!

[kamichel]

The daily price system did not make any sense to me. They claim priced off northern tier states but then the price is offered to all farmers in Western Canada and work freight back from Vancouver. So whoever figured out and approved that ass backward system. Well your day may come when you daily price is better. But that will also be the day I dump some manure, just wait.

[charliep]

Why is this important? What is important to me is the Montana price for 1 US Hard Red Winter Wheat (ordinary which means no protein guarantee/plain jane in terms of other specifications) is US $6.25/bu through out most of Montana.

http://www.ams.usda.gov/mnreports/BL_GR115.txt

Our single desk guys will remind me how you can't compare a spot price to a pooled price. Then they'll tell me that the CWB sells at a premium to other markets. Then they'll tell me that the price is irrelevant because western Canada can't sell 100 % of their crop to the US. Then they'll complain about not being able to move board crops because the open market crops (which include the feed barley sold May to July) are using all the west coast capacity.

Sorry. Got off topic.

[charliep]

Got carried away on price. The HRW price (ordinary) should be $5.16 to $5.95/bu. You would have to have 13 % protein to achieve $6.25/bu.

[charliep]

Did the call on the producer direct sales price call to the CWB call line and got a price of $229.32/tonne for 1CPS red. Didn't ask on 1CWRS.

If true (would have to monitor), farmers along the border would appear to be able to do the FPC/PDS route and make some money.

kamichel - Am also confused by the whole pricing process for CWB products.

[charliep]

I should note that the Portland price for 1HRW ordinary is about $7 to $7.29/bu. Picking the bottom end, that puts the Portland price at about Cdn $270/tonne. This should be comparable to Vancouver/Prince Rupert in store.

[btjadenlepp]

yes charlie you should be able to make money off the cps, and winter wheat, buy-backs. however, it is not easy to find an actual u.s. elevator that will buy canadian wheat because it's against the law for them to re-export it and the cost of special binning, especially during harvest, is too high.

[charliep]

Thanks for updating/correcting. Wasn't aware of this. Lots of barriers when the end of the day simple objective is to sell on given day for a good price that has a fit with a marketing plan/cash flow needs.

[BennyHin]

What is the actual price for HWR in Montana Charlie? Is it $5.00, 6.00, 8.00...$15.00/bu? I'd expect an Alberta government beauracrat to be more precise than us dumb farmers.

Perhaps you should ask the private enterprise for help, such as BrendaJL,at least she seems to know how to calculate a US spot price.

Also Charlie, why is it that Canadian wheat cannot be co-mingled with US grain in the US and exported via US ports? I thought the US was a free market?

Perhaps Franny has an answer, after all he always does and they are often quite funny.

[charliep]

BennyHinn

Perhaps you need training in clipping and pasting web addreses. Sorry I am not techy enough to put in a hot link.

http://www.ams.usda.gov/mnreports/BL_GR115.txt

As a note on the co-mingling, can a US farmer deliver their wheat to a Canadian elevator? The answer is no given our grading system differences. There are also those on this page that it is unrealistic to move every kernel of wheat south (which it is). Just picked up on what btjadenlepp to show this. It is possible to move wheat/barley both directions but you have to follow the rules. Example, direct to processor delivery which eliminates the possibility of co-mingling export grain. Coming north, Canadian maltsters will be experts at this in the coming year but I digress onto another topic.

[charliep]

BennyHinn Perhaps the most interesting thing to me is the close relationship between the daily price/fixed price and the domestic human consumption price. If this relationship is consistent, then farmers do have the ability to move wheat south (with some cost which includes added administration/complexity). So this is not the issue in this thread.

The thread started with a comment on the process around calculating both the daily price contract and the fixed price contract. Both the CWB contracts are administered through single desk calculation and not competition. With the daily price, why shouldn't an Alberta farmer be able to compare this price to a Montana one - regardless of whether you use a telephone to call a US elevator, the internet, an advisor or even (heavan forbid) the CWB? Why isn't the CWB more open on the process for determining? When the CWB says they are taking $5/tonne off for additional basis risk on DPC contracts, where does the money go? Based on current prices, this number would seem to be even higher with the DPC (which sold out in 1 1/2 hours on June 18) and from there a cash cow simply to pad the contingency fund.

[charliep]

asleep. domestic human consumption price should read producer direct sale price. Could be a freudian slip though given there should also be a relationship between what domestic millers pay and the price provided farmers who want to ship wheat/barley south.