Commonwealth Bank expands its ASX grain products
11 January 2008
The Commonwealth Bank has recently expanded its suite of ASX Grain hedging products to include Options over ASX Sorghum, ASX Feed Barley & ASX Canola, enabling producers and consumers to seek more flexibility when assessing their current grain price risk exposures.
"Global grain prices are now at their highest level in over two decades so some excellent hedging opportunities exist for producers at present," said Tobin Gorey, the bank’s Head of Commodities Research.
Essentially, ASX Grain Options will provide a level of price protection in case the market moves in an unfavourable direction. It means producers and consumers with grain exposures can seek greater certainty around pricing and risk management.
ASX Grain Options allow the customer the right but not the obligation to fix either a minimum floor price or maximum ceiling price, with the maximum loss incurred being only the premium payable for the option.
"Grain producers and consumers both have an exposure to price movements and are always seeking hedging solutions to suit their individual needs. Given the current volatilities associated with global commodities, we believe these new products have never been more timely," said Jon Sutton, Executive General Manager, Agribusiness.
The bank will now offer both swaps & options referenced to the local ASX Milling Wheat; ASX Feed Barley; ASX Sorghum; and ASX Canola.
"The agriculture industry operates in very volatile conditions as we have seen with the recent drought. As a result, we have seen a steady increase in customer appetite for hedging products so we’re really pleased to be able to offer a suite of products to assist them in better managing their businesses." said Mr Sutton.
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