Growers using AWB Basis Pool for the 2003/04 season will receive a first payment of $104.15, following the announcement today of the first tranche result for the 2003/04 contract.
AWB Limited General Manager Trading, Peter Geary, said the basis of 10.5 US cents per bushel (c/bu) for the first tranche was comparatively low to previous years, reflecting a weaker market for white wheat.
Mr Geary said the first tranche result was based on Chicago Board of Trade settlement price on February 26, of 387.25 c/bu, and an AUD/USD Hedge Settlement Rate for the first tranche of 77.18 cents.
Mr Geary said a major influence on the first tranche result was the fact that Soft White Wheat had traded at a significant discount to Soft Red Winter Wheat during the past six months, when historically, Soft White Wheat trades at a premium. A number of Australian bulk customers in the Middle East and Asia traditionally price over Soft White Wheat.
“This scenario, which is a result of good supplies of white wheat around the world, has put pressure on white wheat prices relatively to US futures, which will impact the basis achievable relative to the CBOT values,” Mr Geary said.
For growers to determine their Basis Pool returns so far, they should include their individual wheat futures and currency hedging results. Mr Geary said many RiskAssist growers had significantly hedged their foreign exchange component before its recent rise, putting them on track for strong currency results and overall returns.
The AWB Basis Pool gives growers the opportunity to access the benefits of AWB’s management of the Single Desk, and at the same time choose the timing of their wheat futures and currency hedging. This means that growers are effectively generating their own pool return.
AWB riskassist provides an all-encompassing service to support the Basis Pool, including wheat futures and currency component execution, financing of hedge positions and balanced advice on hedging with futures and options.
The payment of $104.15 (FOB, GST exclusive) for APW 10 per cent protein, 5 per cent screenings and 12.5% moisture, will be made next week. Growers will receive 55 per cent of the grade premiums and Golden Rewards increments in their payment, which is not included in the basis result.
The next payment tranches will occur in July and December this year.
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