POOLS CLOSING (OLD CROP)

Flexi Grains pools will be closing at the end of this week – 28th Feb. 

WA WHEAT

When you combine the 3rd largest wheat crop being grown in WA (12.8 million metric tonnes {mmt}) with a significant drop in Chinese buyer demand year on year you end up with the loose balance sheet that WA is currently facing. 

This has clearly influenced the price action we’ve seen – and unfortunately the prospects aren’t that great either. 

In the 23/24 season – China acquired close to 4mmt from Australia

This year – the 24/25 Season – China is on track to acquire approximately just over 1mmt based off recent & forecasted shipping stem figures. 

BLACK SEA WINTER CROP POSITION

It’s been widely recognised that the Black sea winter crop conditions going into dormancy have been very much sub par. This has made it very susceptible to winter kill – and its emergence in March will likely confirm what most analysts think will be approximately 78 – 80mmt. This is smaller then last years poor crop (83mmt) – and 5-7mmt smaller then the 5 year average. 

FXG WHEAT STRATERGY – SELL PHYSICAL & BUY CBOT CALL OPTIONS

The combination of the WA wheat position & sluggish shipping forecast – and the black sea winter crop situation is a very notable watch – and is opening up a good opportunity to have upside participation in a CBOT rally – whilst having no downside risk (because the physical grain is already sold) 

Flexi Grains wheat strategy involves selling physical local grain – and transitioning ownership into CBOT wheat futures. 

FXG would rather take ownership of a CBOT position v holding local grain  – because history has shown us that the correlation between CBOT & local cash prices can be close to 30%, especially with the current loose WA balance sheet. That is to say that for every CBOT dollar increase, the local cash price will likely only follow it by 30 cents. 

If you would like to participate in this strategy with any of your unsold/uncommitted wheat, feel free to contact Henry Vaughan 0497259113.