AWB using futures

[craig]

Saw an interesting news story yesterday that the AWB maybe in additional trouble because they sold a lot of Australian crop on the futures market and now likely won't have enough production to meet their sales. At a time when I was prepared to critcize the CWB for not using the futures. If the CWB is true in their claims that American futures are not a true indication of world wheat values you would think that selling futures would be an appropriate way to increase returns. This is also an example of where the CWB might get premiums in the market place but in fact would be well below what producers could get on the open market. Personally I really don't care who buys my crop if the numbers work.

[charliep]

The AWB likely oversold the market. This is no different than a farmer that over contracted and is forced to buy out contracts or cancel futures.

I will note the difference between the CWB (doesn't sell things that aren't in the bin or at such a low level there is no risk) and the AWB (consciously market forward in order to capture opportunities/manage their members risk).

Don't know which way is right. I am more of the mind that this price/delivery risk should be handled by specific contracts (pre-harvest if you like) to farmers with farmers who choose to take on this production risk being rewarded by higher prices.

[malleefarmer]

Will see what ic an find out

[Zaphod]

There's a very good chance that a good chunk of the buying in US wheat futures and WCE canola in the last couple of weeks came from the Aussies buying back their hedges as farmers' contracts get cancelled.