What is the Platts ASW Wheat FOB Australia?
On October 1, 2019, Platts launched an Australian Standard White (ASW) wheat FOB Australia assessment. This is to reflect the substantial liquidity in the export market for Australian wheat with lower protein content, and as importers closely track grade differentials prior to making purchasing decisions. This launch also supports and complements the existing Australian Premium White (APW) wheat FOB Australia benchmark, assessed by Platts since November 9, 2015.
It is a daily price assessment in USD per metric ton reflecting the traded or tradable value of spot physical cargoes transporting typical spot low protein exportable quality wheat grade, normalized to ASW1 as per Grain Trade Australia specifications, with maximum 12.5% total moisture and minimum falling number of 300 seconds.
How do we assess Platts ASW Wheat FOB Australia?
Platts assessments are based on robust and transparent market data that includes, but is not limited to, firm bids and offers, expressions of interest to trade and confirmed trades reported across the trading day.
The assessment's volume, location, and timing would reflect typical ASW1 wheat exports, normalized to 30,000 mt loadings from Kwinana, Western Australia, for a cargo loading 60-90 days forward from the date of publication.
As per Platts' methodology, the assessment would be made using transactional information collected daily, including transactions, bids and offers up to 4:30 pm Singapore time (0830 GMT).
In the absence of representative FOB Australia price information, Platts may also normalize bids, offers, or trades of atypical ASW wheat cargo sizes from other locations.
Why is this price important?
Western Australia (WA) is the largest wheat producing state in Australia, accounting for 35-60% of total production. 90% of WA wheat is exported, which accounts for 40% of total Australia wheat exports, meaning there is sufficient liquidity in the export market. Finally, out of all wheat grades grown in WA, ASW has the highest production.
A robust and transparent physical price representing the specific dynamics of regional markets and which leads to physical indexation and financially settled derivative instruments is a powerful tool which helps customers and other market participants:
— Manage and hedge price risks
— Leverage arbitrage opportunities
— Carry out negotiations more profitably and efficiently
— Make better-informed planning and trading decisions