Prairie producers will now have the option of locking in their own wheat and durum prices throughout most of the year.
In response to farmer input, the CWB has extended the sign-up period for two major Producer Payment Options, giving participating producers more time to assess harvest and market conditions before making pricing decisions. For 2010-11, sign-up deadlines for the Fixed Price Contract (FPC) and the Basis Price Contract (BPC) will be January 31, 2011, three months later than previously.
“Farmers asked for increased pricing flexibility through these programs,” said CWB president and CEO Ian White. “This enhancement means they will have more time to make informed choices for their business.”
Sign-up for the 2010-11 FPC and BPC programs begins Feb. 22, 2010, with the release of the first CWB Pool Return Outlook for the new crop year. Producer Payment Options were created for use by farmers who want to manage more of their own price risk. First offered in 2001, they have been improved and enhanced each year in response to farmer feedback and market conditions.
The FPC offers producers the ability to set a flat price that can be locked in any day between Feb. 22, 2010 and Jan. 31, 2011. The price is set daily, based on the average price of western Canadian wheat already priced for sale by the CWB and the current market value of wheat yet to be priced. As the crop year progresses and an increasing amount of wheat sales are priced, the FPC values will adjust accordingly, since they reflect returns from actual CWB sales made throughout the year.
The BPC offers farmers the ability to lock in a total return for wheat by pricing basis and futures values separately. The futures component can be priced up to a year in advance of harvest. An adjustment factor is applied at sign-up to reflect sales that have already been priced by the CWB.
Among other new PPO enhancements, producers can now apply previous deliveries to the pools to an FPC or BPC at the time of sign-up. In addition, on a basis-first BPC, farmers now can roll the basis between futures months as they become available. In September 2009, the basis lock-in deadline was aligned with futures lock-in so that both are priced by the basis contract month expiry. The buy-out formula was also simplified.
Program details and sign-up periods and a new PPO Primer page, are online at www.cwb.ca/ppo. The CWB also publishes a weekly e-newsletter dedicated to PPOs. Producers can sign up for the PPO Updater by going to cwb.ca and clicking E-mail updates at the top of the page. Free online training is also regularly available. In addition, PPO program service representatives are based in each Prairie province to answer questions or host workshops on PPOs. Later this month, a new “PPO Dashboard” feature with current market prices and information will be launched on the CWB homepage.
