There’s a new number for farmers to ponder in the Canadian Wheat Board’s monthly pool return outlook.
It’s called the price pace and it indicates how much of the wheat crop has been priced, including both grain actually sold and the board’s futures position.
For example, in the most recent PRO for 2009-10, the board says it has priced about 65 percent of the wheat it expects to be delivered during the year.
It adds that it expects the wheat price pace will reach 75 percent by the end of March.
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In announcing the new system, the board said farmers can use the information to gauge the amount of outstanding risk associated with the PRO.
The higher the percentage priced, the lower the risk that the final price will change relative to the PRO.
Based on the price pace number, producers can decide whether to stay in the pool or sign up a producer payment option (PPO).
“What we want to do is provide more information about the level of price risk in the pool, so farmers can factor the CWB’s pricing pace into their own pricing decisions,” said Curt Denisuik, the board’s director of commodity risk management.
“Producers who wish to price more or less of their wheat than the board’s price pace number can do so in a variety of ways using the PPOs,” he said in the most recent issue of a CWB publication.
If the board has priced 30 percent of the crop, producers who want to have more than 30 percent of their wheat priced can sign up for a fixed price contract, lock in the futures component of a basis price contract or sign up for an early payment option.
Conversely, farmers who want to have less than 30 percent of their wheat priced can leave their FlexPro contract unpriced or lock in the basis component of a BPC, allowing their pricing to fluctuate with market conditions.
