Eyre Peninsula Integrated Commodities

Facilitating Agricultural Commerce through Support and Empowerment

Eyre Peninsula Integrated Commodities 1

Acknowledgements Grain Trade Australia and Lloyd George for the Understanding Grain Markets Information.

DisclaimerEPIC and the GrainXchange are not responsible for future grain market movements and do not provide advice of any description on any grain marketing nor do we provide any financial product advice. EPIC and the GrainXchange do not hold any responsibility for payments, and you should conduct self credit checks prior to selling your grain. EPIC and the GrainXchange do not take into account personal objectives, financial situation or needs. Ensure financial advice is obtained before making any financial decision.

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GrainXchange- For the Growers

Annual Registration Fee - $250 exclusive of GST Access to site to list grain in warehouse, on farm and/or forward contracts.

True Net values & buyer terms– after carry, oil contents, contract sizes, grade spreads, and payment terms have been defined from each company.

Free Publication – registered users only

Access to forum – communication on all industry subjects.

Pool Accountability – objective is to identify where transparency lacks and harvest estimate returns verses actual.

Best current daily and forward contract prices emailed – gathered from all the trade.

GrainXchange- For the Growers

• NEW Flexible Payment terms offered by buyers • Flexible payment terms for buyers to suit their markets.

Designed to give buyers the opportunity to create a marketing edge through changing their payment terms to suit the immediate market requirements.

Can be instigated by either party, and is a specific invitation for buyers.

• NEW Buyers emailed daily each commodity listed totals, with average target price.• NEW Transparency - Lowest and highest and average target prices and total tonnages

available to growers and buyers on the website.

• NEW – Changed from ‘Trade Match’ ‘to Contract- cost 70 cents per ton to the grower, including forward contracts (sliding scale decreases after 1,000 tons in one season to 50 cents)

• Growers will no longer need to confirm with buyer, it will be automated by EPIC staff once grower accepts verbally.

• Document will be legally binding under GTA rules of trade on verbal confirmation between EPIC and Grower, once price and tonnage has been confirmed with buyer.

GrainXchange- How Does it Work

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1. Setting Of Target Prices by growers – Growers will be encouraged to monitor target

(indicative) prices more vigilantly in a rising market and set prices that they are willing

to sell at, so as to not lose buyer confidence by refusal of price.

 

2. If a target price has been met twice with no contract results due to failure to adjust,

then the target price will be removed. Grain will remain listed with no target price

until such time as a re- entered price is managed ethically.

3. EPIC suggests that you list your grain in lots –( i.e. 100 tons) with varying target prices.

EPIC also suggest that you be specific with your tonnages example 102.34 tons so as

to avoid splitting weigh notes.

4. EPIC also suggests that you start listing your grain from the very first delivery. Market

exposure will ensure you don’t miss out on any possible price spikes.

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GrainXchange- How Does it Work

1. Your Target price has been met.

2. EPIC will contact the buyer to confirm bid is still holding

3. EPIC will contact the grower and provide details of the buyer and their bid and will

also advise you of any carry charges or deductions.

4. On verbal acceptance from the grower, EPIC will complete a

‘Broker contract trade match confirmation’ with all details of the contract and

email to the buyer and grower.

3. The buyer will also send a copy of their contract to the grower.

GrainXchange- How Does it Work

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1. Growers can also contact EPIC if they wish to sell for the best daily price.

2. Buyers can view grain listed on the website (no grower details are displayed) and may request EPIC to approach a grower with an offer.

3. You are not obligated to sell your grain through EPIC. You can withdraw your listing at any time. You can change your target price any time of the day or night as many times as you wish. At no time will your grain be sold without your permission.

4. You can also indicate if you are interested in cash deferred pricing products. In this case we will refer the buyer direct to discuss these options. If the referral results in you doing a contract with the buyer they will notify us so we can invoice you the appropriate commission.

GrainXchange- How Does it Work

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Listing Grain On Farm

1.When listing a target price for grain stored on farm, you need to list it as a farm gate price.

2.An on farm price listing needs to reflect base pricing for domestic buyers ,i.e. without freight to port being incorporated.

3.Export buyers are only interested in buying grain off farm once it has been delivered into the system.

4.When calculating target prices for the domestic market, you need to allow for the total storage/warehousing costs to be charged to you when setting your target price.

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GrainXchange – Forward contracts & Spreads

Foward contract Port Lincoln

Commodity Grade Buyer 1 Buyer 2 Buyer 3 Buyer A Buyer B Buyer C BESTPRICE

Payment Terms 9 days 28 days 14 days 21 days 30 days 30 days EOWDWheat H1 $

H2 $ AUH2 $

APW $ 296.00 $ 300.00 $ 299.00 $ 297.00 $ 300.00 $299.00 $ 300.00 ASW $ AGP $ Fed $ AUW $

Barley SC1 $ 292.00 $ 279.00 $ 292.00 GA1 $ 302.00 $ 290.00 $ 302.00 BU1 $ 292.00 $ 290.00 $ 298.00 FB1 $ 255.00 $ 263.00 $ 265.00 $262.00 $262.00 $ 260.00 $ 265.00 FB2 $

FB3 $ Sl1 $ 267.00 $ 260.00 $ 268.00 Fl1 $ 295.00 $ 295.00

Oats Milling $ F1 $ 110.00 $ 110.00 F2 $

Triticale $ Lupins $ 230.00 $ 231.00 Beans $ 270.00 $ 270.00 $ 270.00 Peas $ 230.00 $ 230.00 $ 230.00

Canola $ 495.00 $ 509.00 $ 503.00 $ 509.00 $ 509.00

Buyer 1 Buyer 2 Buyer 3 Buyer A Buyer B Buyer CWheat Multigrade Spreads - 2010/2011H1 15 12 18 15 15 18H2 12 8 12 12 10 12APW 300.00 299.00 300.00 299.00ASW1 -10 -15 -10 -10 -10 -10AGP1 -15 -25 -15 -15 -20 -15FED1 -30 -35 -35 -35 -35Barley Multi Feed - 2010/2011 F1 Base F2 -15 -5 -5 F3 -25 -10 -15

Example O

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Example O

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Forward Contract SpreadsThere may be several companies with similar Forward Contract Prices but their grade spreads may vary greatly.

Also we have seen some companies change their grade spreads almost on a daily basis in the lead up to harvest.

EPIC monitors this daily as the bid sheets come in.

In this example you can see that Buyer 2 and Buyer B both have $300.00 for APW but Buyer 2 has poor spreads Buyer B has slightly better spreads but Buyer 3 and Buyer C have a bid of $299 if you were growing a hard wheat you would gain an extra $1.00 per tonne for H2 and an extra $2.00 per tonne for H1

Similarly if you grow APW varieties the spread to ASW is the same for Buyer B, 3 and C but you would gain an extra $4.00 per tonne on AGP.

From this you can see that Buyer 3 or Buyer C would be the best option as far as value per tonne.

Buyer C pays in 30 days EOWD were as Buyer 3 pays 14 days EOWD making Buyer 3 the best option.

GrainXchange – Monthly storage deductions

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Best Cash Price Port LincolnCommodity Grade Buyer 1 Buyer 2 Buyer 3 Buyer A Buyer B Buyer C BEST

PRICEPayment Terms 21 days 28 days 14 days 21 days 30 days 15 days EOWDCarry Charges Yes Yes Yes No No Jan

Wheat H1 $290.00 $ 302.00 $315.00 $ 313.00 $ 288.80 $ 312.00 $ 315.00 H2 $285.00 $ 288.00 $305.00 $ 300.00 $ 278.80 $ 305.00 $ 305.00 AUH2 $270.00 $ 280.00 $ 285.00 $ 268.80 $ 285.00

APW $275.00 $ 280.00 $290.00 $ 285.00 $ 268.80 $ 287.00 $ 290.00 ASW $258.00 $ 275.00 $285.00 $ 280.00 $ 253.80 $ 263.00 $ 285.00 AGP $247.00 $ 275.00 $ 265.00 $ 248.80 $ 250.00 $ 275.00 Fed $ 260.00 $ 223.80 $ 260.00 AUW $ 235.00 $ 228.80 $ 235.00

Barley SC1 $ 292.00 $ 265.00 $290.00 $ 292.00 GA1 $ 302.00 $ 265.00 $300.00 $ 302.00 BU1 $ 292.00 $ 265.00 $290.00 $ 292.00 FB1 $255.00 $ 255.00 $250.00 $ 250.00 $ 239.80 $ 255.00 $ 255.00 FB2 $ 255.00 $ 247.00 $ 234.80 $ 250.00 $ 255.00

FB3 $ 245.00 $ 245.00 Sl1 $ 250.00 $ 250.00 Fl1 $ 270.00 $ 270.00

Oats Milling $ 185.00 $ 185.00 F1 $ 170.00 $ 170.00 F2 $ - Triticale $ - Lupins $ 225.00 $ 225.00 Beans $ - Peas $215.00 $ 215.00 $ 215.00

Canola $ 471.00 $ 474.30 $ 474.30

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Wheat & BarleyDelivered

October November December January FebruarySelling Selling Selling Selling Selling Jan $ 1.65 Jan $ 1.10 Jan $ 0.55 Feb $ 2.20 Feb $ 1.65 Feb $ 1.10 Feb $0.55 Mar $ 2.75 Mar $ 2.20 Mar $ 1.65 Mar $1.10 Mar $ 0.55 Apr $ 3.30 Apr $ 2.75 Apr $ 2.20 Apr $1.65 Apr $ 1.10 May $ 3.92 May $ 3.37 May $ 2.82 May $2.27 May $ 1.72 Jun $ 4.54 Jun $ 3.99 Jun $ 3.44 Jun $2.89 Jun $ 2.34 Jul $ 5.30 Jul $ 4.75 Jul $ 4.20 Jul $3.65 Jul $ 3.10 Aug $ 6.06 Aug $ 5.51 Aug $ 4.96 Aug $ 4.41 Aug $ 3.86 Sep $ 8.23 Sep $ 7.68 Sep $ 7.13 Sep $ 6.58 Sep $ 6.03 Oct $ 11.75 Oct $ 11.20 Oct $ 10.65 Oct $ 10.10 Oct $ 9.55

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Monthly storage deductions (Carry)Some buyers deduct this fee and some don’t, some may only deduct from January.

In the example above you can see that if you delivered grain into warehouse in December 09 there would be a cost of $7.13 per tonne to be deducted if sold in September 10.

To the left you will see an example of buyer bids, as you can see buyer 3 has the best H1 bid @ $315.00 but this buyer deducts carry from this amount, take off the $7.13 and that leaves you with a net price of $307.87 delivered Port.

Buyer A does not deduct carry and therefore has the best bid @ $313.00 giving you and extra $5.13 per tonne.

Buyer 3 also has the best H2 bid @ $305.00 again carry will be deducted $305.00 - $7.13 leaving you with a net price of $297.87

Buyer C only deducts carry from January a cost of $6.58 leaving a net of $298.42 giving you $0.55c per tonne more.

But Buyer A does not deduct carry therefore has the best bid @ $300.00 giving you a further $1.58 per tonne.