AWB 2017/18 Harvest Pool January EPR update

Today AWB are making Harvest Pool EPR revisions ranging from down $12 to up $25 depending on delivery port zone and grade.

To see the full set of updated EPR numbers please click here
 
Since we last updated you in December, harvest is now all but complete across the country.  We have experienced some big price moves since harvest began on certain grades and in port zones that yielded better than was expected. Nowhere is this more apparent than in the premium hard wheat markets in NSW and Victoria. In WA, the proportion of ASW received also kept growing as harvest moved south to finish with ASW1 representing approximately 40% of all WA wheat received. As a result EPR changes by grade and port zone vary significantly. Refer to the Pool Returns Calculator to view a specific EPR.

Global wheat prices haven’t got off to the greatest start in 2018, however we remain upbeat that local and international markets will provide more opportunity throughout the marketing window.  Locally, we are coming off the smallest wheat crop in a decade with modest stock levels; both of which will continue to exaggerate price volatility.

Last Friday the USDA updated grain stocks, winter wheat seedings and the World Agriculture Supply and Demand Estimates (WASDE). In summary US wheat stocks and planted acres were up on expectations, while global wheat ending stocks were relatively unchanged. The data release sparked a bit of a sell off in CBOT wheat futures with futures falling AUD$8/tn from levels before the release.

With so much time and weather still ahead of US crops we don’t expect to see significant movement in global prices until the crop breaks dormancy next month. With March 18 CBOT wheat futures at around AUD$192/tn today , we feel that futures are very much at the bottom end of the long term range and any risk would seem to be to the upside.
 
Also pressuring domestic wheat prices is the strengthening Australian dollar, which has rallied 5% over the past five weeks to hover around US80c (a four month high). We expect the AUD might run into some resistance before it heads higher, but it has already surprised many pundits with its’ ability to keep pushing higher.

Whilst prices are under pressure today we have almost ten months to market and manage this program.  We remain focused on identifying market opportunities and executing risk management strategies that focus on achieving our pool mandate to outperform the average cash price over the marketing window.
 
AWB also wish to advise that Charlie Brown has decided to leave AWB to pursue a new opportunity.  We want to sincerely thank him for his service and wish him all the best with his future endeavours. AWB’s Pool Management team continues to actively manage the Harvest Pool to deliver on our pool mandate.

Regards,
AWB Pool Management