CHICAGO Board of Trade (CBOT) has announced plans to post daily wheat futures in Australian dollars per tonne, in addition to the current US cents a bushel price.
Plum Grove pool and commodity trader Rob Kelly said the move really highlighted the fact that CBOT recognised the value of Australian wheat.
He said a lot of growers checked the CBOT overnight and convert the US cents per bushel to Australian dollars per tonne.
"This gives growers a quick point of reference and takes the currency risk completely out of the equation," Mr Kelly said.
CME Group executive director, commodity products, Nelson Low said the new centrally cleared, over-the-counter (OTC) wheat swaps will enable producers, exporters and other Australian wheat market participants to manage their wheat market exposure in local currency instead of US dollars
Based on the CBOT Soft Red Winter (SRW) and KCBT Hard Red Winter (HRW) wheat futures contracts, the wheat swaps facilitate hedging for Australian market participants using these global wheat benchmarks to manage risk.
Mr Low said wheat market participants can manage their price risk through the use of cleared, US dollar-denominated OTC wheat swaps, based on the deep, liquid CBOT and KCBT global wheat futures benchmarks.
"Commercial wheat participants will now also have greater flexibility to manage counterparty risk through these cleared OTC swaps," he said.
Mr Low said the new wheat swaps would be of particular value to merchandisers, grain co-operatives, and large producers that priced wheat in the export market and currently used CBOT SRW wheat and KCBT HRW wheat futures to manage price risk.
Farmanco grain marketer Mae Connolly said it was good news for Australian producers.
"In the past we're always used Soft Red Winter as our pricing point, even though our grain quality correlates to Hard Red Winter," Ms Connolly said.
"This is a major step forward for our industry because for the first time we're going to have a simple and transparent market place for the Aussie dollar per-tonne-wheat prices."
The contract will trade in $A0.25 per metric tonne ($A6.75 per contract).