US$

[TOM4CWB]

Charlie;

I see this on DTN today;

"The weak dollar has certainly drawn a lot of press lately -- maybe even enough to mean that the trend has run its course. A February issue of the Economist Magazine featured coverage of the two-year long decline in the U.S. dollar index. There's a theory that when an economic trend makes the cover of a major news magazine, the trend is about to reverse. The author of that theory, Paul Macrae Montgomery, was interviewed in this week's Barron's (March 8, 2004). He notes the Economist cover and says the dollar should rally for several weeks or several months."

Last year at this time... a few predictions were made, how about 2004?

Charlie;

What Alberta Gov. insights can you share with us?

[TOM4CWB]

CWB Bulletin 35
Applying 2003-04 deliveries to a 2004-05 Payment Option

http://www.cwb.ca/en/movement/elevator_managers/elevator_news.jsp

New features for the 2004-05 Fixed Price Contract and Basis Payment Contract — Wheat and Feed Barley

Following consultations with farmers, the CWB has made some enhancements to the Fixed Price Contracts (FPC) and Basis Payment Contracts (BPC) that will make these programs easier for farmers to use.

The most significant change is the extension of the sign-up deadline to October 31, 2004 for the FPC and BPC for wheat and the FPC for feed barley. This will provide farmers with the opportunity to assess the quality and quantity of their crop before signing a contract.

A tonnage limit of 200,000 tonnes has been established for the FPC for feed barley. Sign up is on a first-come, first-served basis.

CONTRACT SIGN UP and COMMITMENT

Sign up for the FPC and BPC begins on February 27, 2004 and continues through October 31, 2004.

Between February 27 and October 31, farmers can sign a BPC for December 2004 and March 2005 futures. Starting August 3, 2004, May 2005 and July 2005 contracts may also be signed.

A rollover option, that enables farmers to change their futures contract month, starts August 3.

There is a $1.00 per tonne administration fee for each rollover transaction.


Farmers can sign up by:
Phoning 1-800-275-4292 and advising the CWB of the tonnes they wish to commit. Farmers are required to provide their 10-digit identification number and CWB Personal Identification Number (PIN) when phoning.

Completing a fax acceptance form for this program (available at www.cwb.ca or through our fax on demand number at 1-800-275-4292) and faxing it to the CWB.

The minimum commitment is 20 tonnes. There is no maximum. Upon sign up, farmers are required to indicate the class of wheat that they will be delivering.

PRICES

Each day at 2:00 p.m., the CWB announces the fixed price, basis and futures prices. These values are available on the CWB Web site at www.cwb.ca, through fax on demand, or by calling the CWB. Prices remain in effect until 7:30 a.m. the following business day. Farmers can lock in their fixed price, basis or futures price by fax or by telephoning the CWB.

Wheat:

The basis is the difference between the PRO and the forecasted futures less a discount for risk, time value of money and administration. The value of the discount can change daily resulting in a change to the basis.

The fixed price is equal to the December Basis plus the December Futures Price. Feed Barley:

The fixed price for barley is the PRO minus a discount for risk, time value of money and administration.

DELIVERY and SETTLEMENT

All classes and grades of wheat are eligible for delivery, excluding sample grades and mixed grain.

An additional discount applies on deliveries of CW Feed, No. 3 CWSWS or No. 4 CWRS.

FPC and BPC contracts are payment contracts only. Farmers must offer the grain on CWB delivery contracts. Delivery occurs through delivery calls issued for these contracts.

If grain is being applied against an FPC or BPC, record the farmer’s FPC or BPC contract number and the call designation on the cash ticket. This ensures that the farmer is promptly paid.

At the time of delivery, farmers receive the initial payment (less freight and elevation) for the grade delivered. Within 10 business days of receiving the delivery information, the CWB will pay the farmer the remaining amount. The farmer is not eligible for adjustment, interim or final payments on these deliveries.

An incremental payment to reflect the time value of money is included in the CWB’s payment to the farmer.


Additional information about these or other Producer Payment Options is available on the CWB Web site or by calling 1-800-275-4292.

[crusher]

I assume freight and other deductions will be 03/04 values. Looks like a farmer could deliver some time after the middle of May and still be covered by CGC. The next unknown will be what grain companies charge for storage. One should be able to negotiate this down, because I would expect the grain company could make their handling fee right away.

[cropduster]

Good news Tom. They must have put away the crib board for at least a few days!!!

[charliep]

Amazing how rules can get changed when it is politically expedient.

I went on a long tirade as to why this is a dumb idea and a strong indication of the benefits of moving to daily cash pricing (either open market or using the CWB Producer pricing option model) only to end up deleting before I could send (likely lucky for people in the room).

My question revolved around having grain in the system under storage tickets (farmers still own this grain and this has impact on the system) as well as the financial risk. The question also has to be raised why Canada carries over so much wheat between crop years when most other competitors effectively sell out their crop. Deliveries at the end of the crop year are a major issue here. Has anyone benchmarked the CWB on this issue?

My firm recommendation is not to use this program. Period.

[cropduster]

Good points Charlie! How do we know some carryover fudging isn`t going on now??

[TOM4CWB]

Charlie;

The strange part is that I would suggest this wheat can be shipped and sold by the CWB even though it is not delivered yet...

My take on this change is simple.

For the rest of the 03-04 crop year, this now effectively is a cash price for 03-04 grain delivered to the CWB.

[charliep]

No one else to jump in so I will share my view (not necessarily the governments). Short term sideways. Long term moving higher although the rise at a reduced rate. The wild card, however, will be the US economy with the relationship between the US green back and the euro/yen/other currencies important.