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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. 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 enables averaging of price differentials among grades and protein levels, reflecting the relationships across the entire pooling period rather than just for 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.
Who offers pooled pricing
The Canadian Wheat Board historically operated wheat, durum, malting barley and feed barley pools. G3 Canada Limited, the company that replaced the Canadian Wheat Board, 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.