National offers unique soft commodity hedging solutions - 11 June 2002

The National has launched a range of hedging products, uniquely tailored to assist producers, merchants and processors manage their exposure to soft commodity price fluctuations.

The National's Agribusiness Price Risk Management Solutions will provide hedging capabilities based on the underlying exposure to soft commodity price fluctuations. This will allow customers to either fix a price, select a price range or set either a minimum or maximum price for wheat, cotton, canola, corn (sorghum), sugar or wool commodities up to 3 years in advance, depending on commodity (refer table below).

The products are cash-settled, so do not require physical delivery. There are no margin calls or exchange traded brokerage fees. Hedges can be established in certain foreign currencies or in Australian dollars to eliminate the need to establish a foreign exchange hedge as well.

General Manager Agribusiness Mike Carroll said the National's Agribusiness Price Risk Management Solutions could significantly change the way in which most agribusinesses approach the uncertainties associated with price and margins.

"We have secured an exemption from the Government to offer these products to smaller operators," Mr Carroll said.

"Previously, restrictions applied to the use of over the counter (OTC) hedging products by customers with gross assets under $10 million. That limited the use of risk management products to the larger agricultural enterprises and corporate clients. The National will now offer these products to customers with at least $1 million in net assets and $300,000 turnover.

"The National has simplified the commodity price risk management process enabling growers to concentrate on what they do best † produce greater yield and quality. Merchants and processors will also benefit by being able to plan and budget with greater accuracy.

"Agribusiness Price Risk Management Solutions are over-the-counter products, so customers do not have to directly transact futures, options or foreign exchange contracts on an exchange, and this simplifies the whole process.

"The process also involves each customer obtaining advice from a Licensed Futures Adviser as an independent check so that they fully understand the hedging strategy discussed with the National Risk Management Specialist."

The National is the largest lender to the Australian Agricultural sector, with over 400 Agribusiness experts in over 100 regional locations across Australia.

For more information and full details, customers should contact their local National Agribusiness Manager, call 13 11 16 or locate your nearest Agribusiness manager.