The government-backed CWB has upped the ante in the new market environment by offering higher initial payments on its Early Delivery Pool and Harvest Pool.
The CWB released information on its 2012-13 initial payments July 30, two days before the launch of the open market in Western Canada. The payments apply to wheat, durum and malting barley delivered to the board.
“CWB pools are designed to provide good value to farmers as we enter a competitive new grain-marketing era,” said CWB president and CEO Ian White in a release. “Our pools are capturing strong current market values and are an excellent tool for farmers to manage ongoing volatility in price and protein spreads.”
The federal government continues to guarantee most of the initial payments and approves the basic levels at which they are set.
The initial payments are equal to about 75 per cent of anticipated final Harvest Pool returns, as projected when the payment calculations were prepared. In the interim, the markets have continued to strengthen. As CWB locks in these higher values, the initial payments will continue to increase.
The CWB also announced it would soon issue its first new-crop Pool Return Outlooks (PROs). However, PROs will be issued when market conditions warrant, no longer on a regular monthly schedule.
The payment for No. 1 CWRS wheat at 12.5 per cent protein is set at $255 per tonne. No. 1 CWAD at 12.5 per cent protein is set at $257. The payment for Designated barley, select Canada Western Two-Row is $230 per tonne. A complete listing of initial payments for all grades in dollars per tonne and dollars per bushel will be posted at www.cwb.ca/payments.
CWB says pool volume may be limited depending on farmer demand and logistical capacity. Farmer participation in CWB pools is based on a first-come, first-served basis.
The Early Delivery Pool has a sign-up deadline of September 28, 2012 and a marketing period that runs from harvest to January 31, 2013 with final payment shortly thereafter. The Harvest Pool has a sign-up deadline of October 31, 2012 and a marketing period that runs from harvest to July 31, 2013.
Initial payments represent a portion of the returns farmers can expect from the sale of their grain over the entire year. During the crop year, CWB regularly reviews the initial payments and recommends adjustment payments as market conditions and sales progress warrant.
Farmers’ decisions to participate in CWB pools should not be based on these initial payment values nor on the market’s current view of new-crop prices. Instead, CWB says farmers should consider signing pool contracts as an excellent risk-management tool that will provide a solid return over a longer period.