Growers looking to jump on early pricing opportunities for canola, sorghum and wheat for next season can now do so via the AWB RiskAssist Fixed Basis contract for 2005/06.
AWB Group General Manager Trading, Peter Geary, said the Fixed Basis Contract provides growers with the ultimate control over price for canola, sorghum or wheat, with the opportunity to separately set the various pricing components of their total grain value at any time prior to delivery.
“The contract offers real flexibility, as growers are able to hedge their futures and foreign exchange components without having to lock in the physical grain sale (basis component) until they are more certain of production,” Mr Geary said.
“There is a zero washout fee on the basis component if not locked in, and no washout fees when unwinding futures and foreign exchange positions. The flexibility of the Fixed Basis makes it an ideal pricing product during times of production uncertainty, and this feature has been very well received by growers using it this season,” Mr Geary said.
Through the Fixed Basis product, growers have the ability to lock in all three components of price in any order:
- Futures Component – growers, through AWB RiskAssist, decide when to set the future price Growers have the flexibility to use futures and options to establish their futures component and reposition hedges to suit their requirements.
- 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 decides to fix both components. These will automatically be locked in on 1/10/2005 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 work with them to develop hedging strategies to manage their price risk,” 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 delivery.”
The AWB Wheat Fixed Basis contract offers an alternative to AWB Basis Pool Plus contract with a smaller minimum tonnage of 408 tonnes, and multiples of 136t thereafter.
AWB envisages that it will be able to provide a further degree of flexibility in 2005 allowing growers to transfer their hedged positions between AWB products. To find out is more information about the product and if it is appropriate for them, and to obtain a copy of the product disclosure statement, growers should contract their local regional office.