National Pool best option in sliding wheat market - 14 October 2004

Thursday, 14 October 2004

A panel of Australia's leading grains industry analysts convened by National Australia Bank told farmers last night that the national pool is looking like the best option to maximise returns from a sliding wheat market.

Malcolm Bartholomaeus, Callum Downs Commodity News; Dennis Wise from Profarmer Australia; Brett Stevenson from Market Check and the National's Head of Agribusiness Risk Management Services Tim Keith agreed that for most growers, the AWB Limited National Pool would be the best option this year.

SA-based Mr Bartholomaeus told the 500 grain growers watching the interactive televised National Harvest Finance Forum that potential movement in global commodity prices and changes in currency values could add another $10 to $15 a tonne onto current pool estimates by mid-2005.

WA-based Mr Wise, while more cautious about pool price upside, said over the past 10 years, pool prices have averaged $7.50 per tonne better than the Nominated Estimated Pool Return Rate price released in the first week of November.

NSW-based Mr Stevenson said while the national pool was a good option, for east coast growers, there would be pockets of opportunity on the cash market for domestic stockfeed and human consumption markets.

"There might be another $5 to $10 a tonne in the national pool over current estimates, but there is also a risk pool returns may slip further," Mr Stevenson said.

The panel agreed that the premiums domestic pools had achieved over export pools over the past two seasons would be unlikely to be repeated this season.

"Pools might be a good option, but growers need to keep their ears on to look for opportunities to snatch cash sales as we move into harvest," Mr Stevenson said.

 Mr Keith highlighted the potential benefits of managing price risk throughout the season rather than leaving it until harvest.  "Our data shows that customers who have used National wheat swaps this year, for example, may be up to $40 per tonne better of than those who are relying on the pool return," Mr Keith said.

The panel told farmers the opportunity to manage the risk of sliding prices had passed and farmers planning to deliver to the pool now need to focus on selecting the best pool product before harvest commences.

"Farmers need to get advice from their financial advisors, consultants or accountants on whether they need to be thinking about managing cashflow now and delaying taxable income to next year, or whether they want to access cash as taxable income this year," Mr Bartholomaeus said.

"If non-taxable cashflow is the best option, then it boils down to choosing a harvest loan with flexible draw-down and with the features that best suit the farmer," Mr Bartholomaeus said.

Mr Wise told the forum farmers should make time in the run up to harvest to make sure they have the right information at their fingertips to accurately compare returns from pools, cash and the prices posted at local silos.

A webcast of the forum can be viewed at www.nab.com.au on the Agribusiness page.

For further information, please contact:

Geoff Lynch
Corporate Affairs Manager Agribusiness
National Australia Bank
Tel: (03) 8634 1564
Mob: 0405 319 819

* The information contained in this media release is for media advice purposes only. The contents are true and correct at time of publishing/issuing, however may change over time. For further information about NAB products or rates, please go to Interest Rates, Fees & Charges