2022/23 Deferred Sales Pool (DSP) has now been finalised with final pool payments settled last month…well just about, 2022/23 DSP Lupin Pool will be finalised in November.

While most WA growers may not need reminding of 2022/23 season records, let’s recap – WA growers delivered a consecutive record production (26.1 MMT) coinciding with the horrendous Ukraine invasion causing global grain supply uncertainty and igniting record international grain prices with the world’s top grain exporters at war.

2022/23 season takes us back to the craziness of the midday CBH cash contract pricing. Alarms were set to be at the office desk and growers made plans to be within telephone range every week day at midday for months – fingers on the ready to win any share of the CBH lotto pricing. Anyone available at midday was put to work and in it to win it! Never again (hopefully)…

Locally, WA growers were faced with an over-supply on account of two consecutive record producing seasons and while our local price reached record highs, our WA Basis hit record lows. Grain buyers had access to significant local supply and sold into strong international markets achieving hefty profit margins. WA’s shipping stem was extremely competitive and WA’s buyer heavy weight (CBH) did not secure the shipping volume they needed. CBH had significant 2021/22 Harvest Pool tonnage and 2022/23 Flexi Starter Pool tonnage adding to their stockpiles which would take up a major portion of their export capacity.

CBH Number 1 Harvest Pool opened by invitation only (calculated on previous tonnage commitments) and a Number 2 Pool (Deferred Sales Pool) opened to all growers.

To take a deeper dive back into 2022/23, refer linked articles below –

Marketline May 31, 2022 – Flexi Starter Pool Strategy
Marketline 27th September, 2022 – Marketing the Bonus Tonnes
Marketline 24th November, 2022 – CBH Deferred Sales Pool

Planfarm Marketing’s 2022/23 selling data is illustrated in the pie chart (refer right) segmented by 76% cash, 14% Flexi Starter Pool, 2% No. 1 Harvest Pool and 7% Deferred Sales Pool.
(refer to below for final 2022/23 CBH Pool returns).

To dissect the 7% Deferred Sales Pool share further –

• 46% Wheat
• 24% Barley
• 17% Lupins
• 13% Canola
• 0.4% Oats

Our primary objective was to gain access to the margins visible in the international market and consequently CBH Pools formed an integral part of our Planfarm Marketing strategy.

The objective of CBH Deferred Sales Pool is to outperform the average of cash prices over the deferred selling window. The pool utilised available export capacity from October 2023 onwards to gradually sell down physical stocks on a deferred sales schedule. Accordingly, CBH expected the majority physical sales would likely occur from April 2023 onwards. This also meant a later finalisation date of July 2024.

2022/23 Deferred Sales Pool Mandate (Wheat/Barley/Canola/Oats/Lupins)

Selling window (December 2022 – July 2023)

The Pool mandate prescribes the boundaries within which the pool must be managed, maintaining exposures within upper and lower limits for physical sales, commodity and foreign exchange hedging.

Chart 1 – CBH Deferred Sales Pool Mandate

 

Wheat (46% of PFM DSP contribution)
The opening ASW1 EPR was $350/t. The cash prices maintained around $355 for the 3 month period while the DSP was open, yet the pool finished at $405.50/t. Post pool closing, the top cash price reached $400/t. The DSP trailed the Harvest Pool ($446) and Flexi Starter Pool ($432) for ASW1 and all other grades. Note: 75% of wheat committed to the DSP was ASW1/ASW9 quality and therefore ASW1 pricing is demonstrated below.

Chart 2 – 2022/23 Wheat Cash Price (ASW1 Kwinana Port Zone)

 

 

Barley (24% of PFM DSP contribution)
CBH released their initial BFED1 EPR at $320. As demonstrated in the below chart, our local cash price peaked at $325 until mid-July when China announced the removal of the Australian Barley tariff. CBH Deferred Sales Pool finalised at $354.75/t, trailing FSP ($400) and slightly below CBH No 1 Harvest Pool ($367).

Chart 3 – 2022/23 Barley Cash Price (BFED1 Kwinana Port Zone)

 

 

Canola (13% of PFM DSP contribution)
CAG EPR opened at $800, CAG cash price January until March hovered around $740 to $760 before declining to $615 by the time the pool was about to be closed. Majority of PFM tonnes committed into the DSP were very late, so the finalised number of $758/t could be viewed as a positive result when considering available alternatives at the time of tonnage commitment to the DSP. The cash price did recover to this level around July/August. The Deferred Sales Pool was well below the FSP ($846) and Harvest Pool ($802) for CAG.

Chart 4 – 2022/23 Canola Cash Price (Kwinana Port Zone)

 

 

Lupin (17% of PFM DSP contribution)
CBH Deferred Sales Pool finalises November 2024. 2022/23 season Lupin $/t average December 2022 to current date is $371.70/t and has been carried up on the back of record 2023/24 season cash pricing. We hope to see this increase (or part of) reflected in the 2022/23 DSP finalised returns in November.

Chart 5 – 2022/23 Lupin Cash Price (Geraldton Port Zone)

 

 

Oat (0.4% of PFM DSP contribution)
2022/23 season Oat $/t average December 2022 to April 2024 achieved $334.97/t. 22/23 season pricing peaked at $470/t mid-October 2023 carried up with 2023/24 season pricing.

 

Like 2022/23 season production, market pricing set new records that brought new challenges and countless opportunities and Pool products were amongst the mix. CBH 2022/23 Harvest Pool pricing summarised below reflects high decile outcomes across all commodities.

The world of grain marketing remains exciting and challenging and not one single season 100% replicates another albeit weather, production or market pricing. Our 2024/25 season is really starting to hit the straps across WA and again, new challenges are presenting, and again, we look forward to the opportunities that come our way.

 

Disclaimer: This publication has been issued for the exclusive use of the particular person to whom it is provided by Planfarm Marketing and may not be copied or transmitted without permission of the publishers. Any recommendation herein contained should not be relied on without specific consultation with your advisor at Planfarm Marketing as to the appropriateness to you given your situation, needs and objectives. Planfarm Marketing does not accept any responsibility to inform you of any matter that subsequently comes to its notice which may affect any of the information contained in this document. Although the data used to arrive at the above analysis and/or recommendation has been obtained from sources considered and believed to be both reliable and accurate no responsibility is accepted for any error or omission that may have occurred. © Planfarm Marketing Pty Ltd.

Note: Pricing and charts sourced Grain Market (August 27, 2024).