May 28 — It is getting very late in the game to be in the dark with regards to wheat
pricing options in 2008-09. Farm marketers in Western Canada attempting to manage pricing risks and
opportunities are dealing with significant uncertainty in wheat, due to a lack of program information
provided by the Canadian Wheat Board (CWB). Meanwhile, the wheat market has been in free-fall from
last winter’s highs.
In reviewing today’s announcement of a new producer payment option (PPO), FlexPro, to be introduced in
find no information on the pricing to be used under the contract.
“What matters the most to maximizing
profitability in marketing is the price. Market analysis works to achieve higher prices in marketing crops.
The information we need is not here,” said Brenda Tjaden Lepp, co-founder and chief market analyst.
The daily price contract (DPC), which FlexPro replaces, offered attractive prices compared to pool
returns in the past two years, which FarmLink clients were able to capitalize on. The group has been
anxiously awaiting finalized information about the coming year’s PPO programs since the CWB
announced in April that there would be changes. Farmers likely would have pre-priced more 2008-crop
wheat earlier at higher prices had they known with certainty which CWB risk management tools would
be available in 2008-09, and how they would work.
“We don’t need a new PPO, especially not one that appears essentially the same as the existing fixed
price contract (FPC),” said Tjaden Lepp. “The CWB keeps tinkering with what are already
the real limitations of the system. Wheat and barley are not the only crops we market, but they are the
most confusing due to the layers of non-transparent regulatory considerations that we are forced to
decipher in making sales decisions.”
World grain and oilseed markets have become increasingly chaotic in the past year as players grapple
with historically tight supplies, massive competing new demand segments and heightened speculative
involvement. Farmers are spending record amounts in 2008 to produce crops. “The issues facing farmers
today are bigger than this. The CWB needs to be more of a help, and less of a complicating presence.”
— The FarmLink Market Insight was researched and produced by FarmLink Marketing Solutions, a marketing advisory service for Prairie farmers, and is published here with permission of the authors.