CBOT quotes in $A

22 Aug, 2013 02:00 AM

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).

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Ted O'Brien.
26/08/2013 5:35:03 PM, on The Land

"Recognises the value of Australian wheat?" This I doubt. That doesn't change. Recognises the value of the $Au, more likely. There has been comment lately about the propriety or otherwise of using the $Au as a "reserve currency". There is an unmentioned factor underpinning the inflated value of the $Au. That is Australia's demonstrated willingness to pay its bills by selling off not just the family silver, but the house and land as well. Cubbie was just one example. If you want to really understand it, research the takeover by Campbells Soups of Arnotts Biscuits.
Philip Downie
27/08/2013 6:00:26 PM, on The Land

SRW, who are you kidding that is rubbish wheat. AWB used HRWO as a start point for APW. You still have to do the currency conversion to make sure the rate they are using is right. If they are pricing against SRW then they are getting good value even with our fall in quality, which will continue given recent decisions by WQA and WA in particular will go further down. It is so stuffed for the future it is scary.


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