The Canadian Wheat Board has announced changes to its Basis Price Contract (BPC) program for 2010-11.
The BPC contract offers the choice of locking in either the basis or the futures component first and locking in the other later.
A late sign-up adjustment factor is also applied to the contract at sign-up. It represents the cost of buying tonnage out of the pool after sales have been made. It is calculated when the pool sales period begins. Prior to that, the late sign-up adjustment factor is zero.
The buyout formula for the BPC program has been amended for 2010-11 to simplify the calculation and offset any costs with gains from the three pricing components. The new formula (per tonne) is: (current futures + current basis + current late sign-up adjustment factor) (producer’s futures + producer’s basis + producer’s late sign-up adjustment factor) + $2.50 adminstration fee If the formula results in a negative value, no buyout cost will be assessed.
For more details, visit www.cwb.caor call 1-800-275-4292.