Growers seeking to capitalise on early pricing opportunities for sorghum and wheat can now access the AWB RiskAssist Fixed Basis contract for 2004/05.
AWB Group General Manager Trading, Peter Geary, said the Fixed Basis Contract provides growers with the ultimate control over their wheat prices, with the opportunity to separately set the various pricing components of their total wheat value at any time prior to delivery.
“The contract offers complete flexibility, which makes it a superior product during times of production uncertainty, allowing growers to hedge their futures and foreign exchange components without having to lock the physical grain sale (basis component) until they are more certain of production,” Mr Geary said.
Through the Fixed Basis product, growers have the ability to lock in all three components of price:
Futures Component – growers, through AWB RiskAssist, decide when to set the future price (based on either December 2004 or March 2005 Chicago Board of Trade wheat futures and May 2004 or July 2004 Chicago Board of Trade corn futures for sorghum). Growers have the flexibility to use futures and options to establish their futures component.
Foreign Exchange Component – growers, through AWB RiskAssist, decide when to fix the foreign exchange rate component.
Basis Component –basis prices are quoted daily, derived from relevant daily cash prices.
For wheat, growers can also control their varietal grade spread and quality scales (protein, moisture and screenings), which can be fixed at contracting, or left floating until the grower decide’s to fix both components. These will automatically be locked in on 1/10/2003 as per AWB Multi V if not fixed previously.
“Growers access the product through AWB RiskAssist, who will provide the latest market analysis and information for informed decisions, and match strategies to growers’ individual price and production profiles,” Mr Geary said.
“Once all components are locked in, growers using the Fixed Basis Contract will have a guaranteed price and a known cashflow– with full payment in 30 days from the end of the week of delivery,” Mr Geary said.
“The AWB Fixed Basis contract offers an alternative to AWB Basis Pool contract with a smaller minimum tonnage of 408 tonnes,” Mr Geary said.
For more information about the AWB Fixed Basis contract, growers should contract their local regional office.