IN a grain market where the domestic price is substantially below export parity, caused by there being insufficient shipping slots to match the anticipated production, access to CBH Grain's pools offers growers their best option to obtain export parity prices.
However CBH Grain has restricted access to its pools to historic levels and despite a huge increase in demand, has only allocated slightly more shipping slot capacity to them than last year.
CBH should be adjusting their split between cash and pool to reflect current, not historic demand.
In a situation where there is likely to be a carry-over of grain into the following year, pools enable export parity pricing to be achieved, although full payment will be delayed until the sales are completed in the following year.
To many growers that is a far better alternative to accepting a cash price for grain that maybe at a $150 per tonne discount to export parity.
If CBH Grain really wanted to improve its pooling products, it could attach hedging options to its pools, giving growers the option of fixing prices at current levels or allowing a proportion of sales to be exposed to future price movements.
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In previous years when there has been adequate shipping slots, the cash market has functioned reasonably well.
Cash bids when fairly priced have been the preferred marketing option for most growers.
With the current discounted cash market, I'm not sure that is the case any more and current demand for pools, not historic demand, should be determining CBH Grain's split between pool and cash for its shipping slots.
However penalising those growers who made rational decisions to sell for cash in the past, by restricting their access to pools today, ignores the state of the current grain market and grower requirements.
By protecting its cash marketing arm at the expense of pools even when the latter, under current market conditions, are in growers best interests, CBH Grains leaves itself open to accusations it is prioritising its profits at growers' expense.
If the current high elevator margins are ongoing it will mean CBH Grain's cash trading arm will again be making windfall profits this season.
If CBH Grains was to open up its pools to all growers, and in the event that the demand swamped CBH Grain, forcing them to revise shipping slot splits in favour of pools, growers who wished to sell for cash would still have access to the private traders, that holds more than 50 per cent of the shipping slots.
However real competition from pools would force them to pay prices nearer to export parity.
