How Price Pooling Works

The objective of price pooling is to average the market value of a crop over the course of a pooling period. A pooled price reflects an average price over several weeks, months or a year’s worth of market sales activities 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, 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 with regulated single desk authority 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). G3 Canada Limited, the company that replaced the CWB, offers a form of pooled pricing. Other grain companies may also offer pooled pricing as a marketing alternative for producers wanting to manage pricing risk on at least a portion of their crop by averaging sales across a specific time period. Pooling remains an appropriate marketing instrument for producers who do not have sufficient time, skills or desire to take an active role in marketing on a daily basis.

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, be aware of any underwriting fees, adjustments and pool management fees.

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 13, 2017.