WEST PERTH, AUSTRALIA — CBH Group has finalized the 2011-12 wheat harvest pool with a final pool return of A$280.04 per tonne for APW2. Over A$600 million has been paid to pool participants since the pool opened in October 2011, CBH said on April 8.
Based on the average quality of APW2 across the state for the 2011-12 season, the CBH wheat harvest pool currently provides the greatest return, by an average of A$11 per tonne when compared to other wheat harvest pools offered for that season.
Head of Trading Don Campbell said the 2011-12 season was characterized by a record breaking Australian harvest and fluctuating wheat prices.
“Macroeconomic concerns emanating from the Eurozone impacted commodity prices through the appreciating U.S. dollar and a heightened correlation to outside markets,” he said. “Subsequently, the 2011-12 season began with a bearish sentiment after Chicago wheat futures suffered their largest annual drop since 2008, trading below A$6.50 per bushel for the majority of the period up to mid-2012.
“The onset of drought during the key production period for U.S. coarse grains caused a surge in global grain prices mid-year with wheat prices increasing by 58%.
“Global wheat prices have since depreciated, as expectations for a large U.S. export and domestic wheat feed program did not eventuate. Given the adequate stocks and the prospect of the largest U.S. coarse grain plantings in 77 years, U.S. grain values have returned to their pre- drought levels.”
The CBH Group physical sales program was well supported by its traditional markets of South East Asia, China, Japan, Korea and the Middle East.
“Despite being 75% sold and hedged prior to the mid-year rally, the portfolio was able to partially participate through option structures and active management,” said Campbell. “Throughout the life of the pool, Australian dollar hedging was focused on tracking physical sales over the course of the season. As global market conditions soured on Eurozone concerns, hedging was increased to participate in the depreciating currency.”