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What is the PRO?
PRO = weighted average of (priced grain + forecasted prices on unpriced grain)
The CWB Pool Return Outlook (PRO) is a projection of how much money the CWB will end up returning to farmers who deliver wheat, durum or barley for payment through the pool accounts. The pool accounts provide farmers with the average return (for a particular grade and class of grain) that the CWB obtained from all customers who bought western Canadian grain throughout an entire crop year. Pooling minimizes the effects of market volatility during the year and is an effective risk-management tool for farmers.
PROs are usually issued on the fourth Thursday of every month. The first PRO of each crop year is released in February, before seeding has even taken place, and continues each month until August of the following calendar year.
The PRO represents the best forecast that can be made at the time. For obvious reasons, it becomes increasingly accurate as the crop year progresses and grain sales proceed.
A huge variety of factors – ranging from basis risk to dietary trends – affect prices for wheat durum and barley. Because of this, the PRO can only be a forecast, not a guaranteed price.
The PRO is designed to give farmers market signals and to provide an indication of cash flow expectations. It gives farmers an idea of what pooled payments to expect. It provides a sense of the movements in spreads between the various classes and grades of grain. It can also be used to help decide when to take advantage of off-board markets or use Producer Payment Options to manage individual price risk.
CWB staff use a wide variety of information sources to develop the PRO and the CWB sales plan:
- The sales and marketing team has daily interaction with industry and customer contacts around the world.
- Market analysts compile data required to make short- and medium-term import demand estimates.
- Weather and crop surveillance staff monitor crop growth in Western Canada and around the world to gauge the impact of weather patterns on grain markets supply.
- CWB financial analysts study foreign exchange rates and movement in the money markets.
- Commodity risk management staff analyze the commodity markets and hedge grain sales throughout the year to minimize risk and maximize gains.
- Staff in the Logistics, Farmer Service and Farmer Operations departments continually update CWB supply estimates, as well as freight rates and capacities for grain-handling and transportation.
- Marketing Strategy staff keep tabs on trends in customers’ specific milling, baking and brewing requirements.
Each PRO also includes a commentary on the factors and trends that contributed to the numbers forecasted for each pool: wheat, durum, designated barley and feed barley. The monthly PROs can be found here
