Canada: CWB launching two new pools for farmers

CWB on December, 6 announced it will launch two new pools for farmers, including one that enables each farmer to choose their own price based on futures values.

The Winter Pool will operate like traditional pools, and features a six-month pooling period that enables farmers to capture late-season prices, without risking the daily volatility of the cash market. The Futures Choice Winter Pool provides the same benefits of the Winter Pool, with the flexibility for farmers to choose futures values in order to capture market peaks.

"These exciting new marketing tools have been developed in response to farmer feedback and grain-pricing needs," said CWB president and CEO Ian White. "Farmers who have not yet committed their grain now have new options. Those who believe the latter part of this crop year will return high prices can take advantage of the Winter Pool to achieve the seasonal average. Or, they can use the Futures Choice Winter Pool to choose the specific times when they think futures values are at or near their highest. Both pools give farmers access to CWB's marketing expertise plus contract flexibility regarding delivery options and management of grade risk."

The Winter Pool opens December 12 to farmer sign-up for various classes and grades of wheat, durum and canola. The sign-up deadline is February 15, with delivery guaranteed by July 31. Farmers can switch grades at no cost until the sign-up deadline, or switch to an available cash contract for a nominal fee.

The Futures Choice Winter Pool is open to Canada Western Red Spring (CWRS) wheat and is based on Minneapolis Grain Exchange futures. Farmers can sign up between January 7 and February 15, then lock in a futures value of their choice any time before June 21, with delivery guaranteed by July 31. Compared to cash contracts, the Futures Choice Winter Pool provides basis pooling, more grade flexibility, grade and protein spreads that represent the market for the pooling period, and the ability to market through any participating grain-handling company. Target pricing will also be available.

Both pools will operate on a first-come, first-served basis and may close before the sign-up deadlines if maximum pool tonnage is reached.

CWB's first Pool Return Outlooks for the Winter Pools are available in full at www.cwb.ca/pro with reference grades included in the table below.

CWB will publish the Futures Choice Winter Pool PRO by the time sign up begins on January 7. Given current PRO assumptions, farmers in the Futures Choice Winter Pool can expect to achieve a final return for 1 CWRS 13.5 in store port position made up of the futures value they lock in plus 5.00 to 10.00 dollars per tonne.

"Choosing a pooling option is a great way to stabilize grain price fluctuations and generate returns from across markets," White said. "Our focus is to maximize value for farmers."

07 December, 2012