AWB 2018/19 Season Starter Pool January EPR (Market Update)
AWB Pool Programs
Today AWB are updating EPRs by between -$10/t and +$30/t as harvest receivals for different grades are digested by the market. We are increasing H1 & H2 for all WA port zones by between $10 and $28/t, and reducing ASW and ANW1 by up to $10/t, as the hard wheat premiums have strengthened. Conversely SFW1 and FED1 are the largest gaining grades on the East Coast, as the feed grain shortage continues to bite due to the ongoing drought.
• Basis hedges remain unchanged since the last update at 54%. The program is now well protected on grades we feel most at risk, and we await to see how the market responds as harvest-selling winds up.
• We are not currently holding wheat futures hedges (currently at 54%, in line with physical sales) as US wheat futures have not experienced the price gains global wheat markets have in recent months. At US512c/bu, March19 futures remain only US10c/bu above recent lows, which we think will provide a floor in the short-term.
• Since our last update we have increased our FX hedges 54% to 62%. With the exception of the ‘flash crash’ in the first trading week of the New Year, the AUD/USD has maintained a ‘bid-tone’. While the US government shutdown and the UK’s Brexit plans both remain far from resolved, AUD will have limited downside against their respective currencies.
• Hard wheat premiums are beginning to take a breather on the East Coast as trade quietens out of harvest. In Kwinana, APW1 was commanding as much as a $50/t premium to ASW1 in December, as traders tried to fill early shipping commitments. This spread is back to circa $30/t today.
• Sorghum harvest has commenced on the early crop in Southern QLD. Although the extreme heat has shifted south into NSW, the market is pulling back top-end potential of the total sorghum crop due to lack of follow up rains.
• As history’s longest running US government shutdown continues, the US wheat futures market is without the typical guidance it gets from reports like the USDA weekly export sales and the monthly supply and demand updates. This has meant subdued price moves, and has the potential to result in a few surprises when that information finally comes to light.
Fore more information contact AWB Grower Service Centre - 1800 447 246
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