AWB Offers 2005 Fixed Basis Contract

SYDNEY - Sep 8/04 - SNS -- The Australian Wheat Board (AWB) is now offering its fixed basis contracts for canola, sorghum and wheat to be delivered during the 2005-06 marketing year.

AWB Group General Manager Trading, Peter Geary, said the Fixed Basis Contract provides growers with the opportunity to separately set the various pricing components of their total grain value at any time prior to delivery.

"The contract offers real flexibility, as growers are able to hedge their futures and foreign exchange components without having to lock in the physical grain sale (basis component) until they are more certain of production," Geary said.

"There is a zero washout fee on the basis component if not locked in, and no washout fees when unwinding futures and foreign exchange positions. The flexibility of the Fixed Basis makes it an ideal pricing product during times of production uncertainty, and this feature has been very well received by growers using it this season," Geary said.

Through the Fixed Basis product, growers have the ability to lock in all three components of price in any order:

- Futures Component - growers, through AWB RiskAssist, decide when to set the future price Growers have the flexibility to use futures and options to establish their futures component and reposition hedges to suit their requirements.

- Foreign Exchange Component - growers, through AWB RiskAssist, decide when to fix the foreign exchange rate component.

- Basis Component -basis prices are quoted daily, derived from relevant daily cash prices.

For wheat, growers can also control their varietal grade spread and quality scales (protein, moisture and screenings), which can be fixed at contracting, or left floating until the grower decides to fix both components. These will automatically be locked in on 1/10/2005 as per AWB Multi V if not fixed previously.