How Price Pooling Works

 
 
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 The objective of price pooling is to average the market value of a crop over the course of a pooling period. In essence, a pooled price reflects an average price over several months or a year’s worth of market sales activities across a variety of geographic markets as compared to the price risk inherent in fixing a price on a given day. Pooling also provides price differentials between grades (and other quality factors such as protein) that reflect the relationships across the entire period rather than a given day or week. In some years, price spreads between grades and quality can be large in value, highly volatile and very difficult to predict. Price pool returns are the sum of all revenue achieved on all sales less the costs of operating the pool, divided across the total tonnes in a pool. Price spreads reflect relationships between grades and quality attributes during the entire pool period.

Prior to August 1st, 2012, Federal legislation provided the Canadian Wheat Board regulated single desk authority (exclusive rights) to market all western Canadian wheat and barley for export and domestic human consumption. The Canadian Wheat Board historically operated wheat, durum, malting barley and feed barley pools (with additional Producer Pricing Options on some grains). The new CWB continues to offer pools (albeit functioning differently in some ways than pools prior to Aug 1st, 2012) which remain a marketing alternative for producers seeking to manage pricing risk by averaging sales across a specific time period. It remains an appropriate marketing instrument for many who do not have sufficient time, skills or desire to take an active role in marketing on a daily basis. Producers may continue to allocate a portion of their production to CWB pools in order to hedge against their own marketing performance.

The new CWB operates pool accounts for wheat and durum wheat, malt barley and as of September 2012, Canola.
Other crops where pooling is available include a voluntary edible bean pool operated by Viterra in Southern Alberta. For more information on pooling, consult the details of the specified contracts offered by grain buyers before entering into a contract and be aware of the appropriated underwriting fees, adjustments (such as the CWB’s Eastern Movement Adjustment) and pool manager fees.

Additional information:

CWB Website and pooling overview
CWB Harvest Pools
CWB Early Delivery Pools
Viterra Edible Bean Pool - Viterra Alberta Bean Division (403) 454-2227
 
 
 
 
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For more information about the content of this document, contact Neil Blue.
This document is maintained by Erminia Guercio.
This information published to the web on October 25, 2007.
Last Reviewed/Revised on August 20, 2015.