Drew Penberthy's Pacer Ultra and Market Ultra Story
Drew Penberthy is focused on maximising yields on his broad acre farming property on the black soil plains of North West New South Wales. After months of hard work to grow the best crop, he wants the best price for his product. Drew found he was struggling to find the time to do the legwork required to market grain himself so he turned to AWB’s PRICE+ Pacer Ultra and Market Ultra products. They allowed him to secure a minimum contract price while also capitalising on rises in the futures market. Using the Pacer Ultra contract in 2015 he was able to forward sell his wheat at over $60/t higher* than prices at harvest that year. He set a solid minimum price, but then used the ‘re-price’ feature during a futures rally to finalise the contract $25/t higher*. “No one knows what the market it going to do, so what it did was give me a guaranteed minimum price basically,” he explains. “I wanted to take some position to get a bit of security on pricing and I wanted to be able to take advantage of the market rising but I didn’t want the downside, so it was a win-win situation.” His first contract was so successful he took out a second Pacer Ultra contract which protected him from a fall in prices. “I let it go all the way through because the price actually came back under the price that I’d locked in.”
Having significantly increased his returns on forward selling contracts, Drew chose to try the Market Ultra PRICE+ contract to sell his sorghum crop at harvest. This meant he was able to lock in a minimum price and was guaranteed 100% payment at delivery. There was also potential for an additional payment over time if the market rose. “Instead of holding onto my sorghum and copping fees because it was in the system, I chose Market Ultra instead. It gave me access to my money straight away, no warehousing fees or any of that sort of thing and if the price had kicked in time I would have made a bit of money. The market went backwards, but I still see it as less risky because you’re protected from the downside.”
Being free to concentrate on his farming is very important to Drew, but he believes taking control of grain marketing is also paramount to running a successful operation. He says it can be difficult to maximise performance at both ends of the spectrum. “At the end of the day I don’t have time to chase prices and markets, I’m not a marketing expert. I’m too busy trying to maximise our yields and I tend to forget about marketing till later in the season. That’s why I went with PRICE+ because marketing is such a big component of farming and we’re missing opportunities throughout the year that we probably should be taking.”
Drew used PRICE+ products again this season to cope with subdued grains prices due to oversupply. He has encouraged other farmers to look into PRICE+ products. “They’re were talking absolutely rock bottom prices so if there was any kick during the season and I saw an opportunity, I was going to take it… With the big year in Australia I just couldn’t see a lot of opportunities at harvest time.” Drew also sees the benefits in dealing with a large, reputable grains company which also has strong local representation. “I’ve been stung before selling to people and not getting paid and that’s a real concern, so there is more security with AWB because they have the size to withstand the tough times. It’s also about talking to a local, someone you know and someone who knows the area and knows what’s involved with our farming systems.”
For more information on Pacer Ultra or Market Ultra