AWB will be offering an early commitment premium of $15 a tonne to those growers who make the earliest decision to sign up to AWB’s 2010/11 season wheat pools, with the new contract available from Monday, 31 May. The new pool offer has coincided with AWB raising its estimated pool returns (EPRs), following the significant fall in the Australian dollar.

AWB General Manager Commodities, Mitch Morison, said AWB’s EPRs had increased by $10 a tonne, lifting APW wheat to $260 a tonne and ANW1 noodle wheat to $270 a tonne in the Western Pool and APW wheat to $254 a tonne in the Eastern Pool (FOB, excl GST).

“The spectacular decline in the dollar has enabled us to increase our pool forecast by $10 a tonne, which is a very welcome review as we launch our early commitment program,” Mr Morison said.

“This is the earliest that AWB has ever offered its early commitment premiums; each year the structure of the market is different so we assess the market conditions to offer the most appropriate product.

“In the current environment, the dollar notwithstanding, market fundamentals are bearish for wheat, so we have brought the first round of early commitment premiums well forward to extract maximum benefit from the forward market curve.

“We know we need to offer growers an incentive to commit at this time of year and take on risk for their business, so the level of premium represents the value we believe we can extract from forward derivative and currency markets via structured hedge programs, and greater forward planning for logistics efficiency.

“We see our pools as part of a grower’s broader marketing strategy, which is certainly what our grower clients are telling us; they are seeking certainty, simplicity, transparency and performance and that’s what we provide.

 “Grain marketing is very competitive these days, so we encourage growers to fully investigate the available options when deciding whose pool products to use and how they might fit their personal strategy.

“Compare things such as risk and timing carefully and be wary of claims about past performance as they can be very misleading; all products have different features so it needs to be the grower’s choice about what they want to achieve,” Mr Morison said.

Key features of AWB’s 20010/11 season wheat pools include:

• Two tranches of Early Commitment Premium; the first available from 31 May offers a $15 a tonne premium to the final pool return
• A maximum washout fee on contracts of $20 per tonne
• Distributions guaranteed to occur in April 2011, July 2011, October 2011, January 2012, with aim to finalise by April 2012
• Greater certainty and simplicity with both the AWB Loan and Advanced Payment funded at 70% of the Nominated Estimated Pool Return less estimated costs.

AWB encourages growers to check the AWB website and familiarise themselves with the terms and conditions for its 2010/11 season wheat pools, before entering into wheat supply contracts.

AWB media contact: Ian Desborough 03 9209 2335 or 0418 853 881

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