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Compatibility of Government Guarantees with Flexibility in Canadian Wheat Price Pooling

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  • Unterschultz, James
  • Novak, Frank

Abstract

Financial option theory is used to evaluate Canadian Wheat Board (CWB) price pooling and associated government guarantees. Price guarantees and final payments on the pool can be viewed as special financial derivative products. Financial models are used to evaluate pricing flexibility alternatives within the constrains of the CWB price pooling system and at the same time to provide a measure of the CWB dollars at risk associated with offering these contracts. Flexible pricing alternatives may not be compatible with a government price guarantee. The CWB dollar risk of flexible pricing could be substantial.

Suggested Citation

  • Unterschultz, James & Novak, Frank, 1998. "Compatibility of Government Guarantees with Flexibility in Canadian Wheat Price Pooling," 1981-1999 Conference Archive 285716, NCR-134/ NCCC-134 Applied Commodity Price Analysis, Forecasting, and Market Risk Management.
    • Handle: RePEc:ags:nc8191:285716
    DOI: 10.22004/ag.econ.285716
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    Cited by:

    1. is not listed on IDEAS
    2. Joseph M. Santos, 2014. "Back to the futures: An assessment of market performance on the early Winnipeg Grain Exchange," Canadian Journal of Economics, Canadian Economics Association, vol. 47(4), pages 1426-1448, November.

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