Vast Variation between Pool Operators
The Land [email protected]
Final 2013 pool returns of different managers vary as much as $40 per tonne, according to recently published Profarmer benchmarking analysis. Comparison of pool performance gives growers the opportunity to evaluate different providers on their track record rather than on their promises.
The spectrum of results in NSW showed considerable variation. For the Newcastle port zone, the lowest performing pool returned $275/t for APW1 while others achieved above $315/t, a difference of a whopping $40/t for the same grade at the same port.
For a farm business, a difference of $40/t is significant, amounting to $40,000 for 1000 tonnes and $100,000 for 2,500 tonnes, a variation that could make or break the profitability of a farm for the season.
Pool returns at Port Kembla for APW1 varied by more than $30/t between pool providers according to the report. The lowest performing pool returned less than $270/t while the highest returning Market Check programs delivered the top results of $300/t.
So how do these pool returns compare with harvest or postharvest cash sales?
Market Check’s Pool Manager, Alex Campbell, said it is important to benchmark pool products against the cash market as well as against one another.
“We are pleased that Market Check not only again outperformed other pool managers, but we also topped market benchmarks such as the harvest market, as well as average post-harvest prices net of interest & carry. We constantly strive to perform against these benchmarks,” Mr Campbell said.
Selling APW1 at Newcastle between November and December delivered an average return of $303/t and averaging cash sales over an 8 month period $300/t (net of interest and carry). Both harvest and postharvest selling benchmarks are lower than the $312/t achieved by the Market Check managed program, net of management fees.
For the Port Kembla port zone, a harvest sales approach over November and December would have delivered average returns of $293/t and an 8 month average sales program, even less at $289/t net of interest and carry.
Selling for cash at harvest or post harvest does not therefore necessarily outperform a quality pool or managed program and endorses the argument that pools still play a part in a balanced marketing strategy. However, with such variances in final returns, it is important to choose wisely between pools.
Profarmer analysis sees Market Check achieving the highest pool returns, assuming no increments are paid, across all eastern port zones for all grades bar one (where their final returns were a close second to the highest). This is the consecutive year that benchmarking has found Market Check managed programs to be an exceptional perfomer.
The full Pool Report is available from Profarmer, complimentary to members and at $200 to non-members.
Further information from:
PO Box 1050
Pymble Business Centre NSW 2073
Tel: (02) 9499 4199
Fax: (02) 9499 4188
Email: [email protected]
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@TEMarkets As you know from a decision-making view, deciles have limited value in isolation as the range within deciles can be extreme eg drought you sell @ dec10 & miss another $100t. Overlaying with deciles based on relative value paints a clearer pic eg Aus currently ~dec1 basis US futs