The 2017 season is in full swing and pricing is naturally on growers’ minds. Here’s a quick ‘refresher’ on how your in-season returns are calculated.
The final return that Mackay growers* receive for the 2017 Season is a combination of:
- the QCS Short Term Pool price, which combines QCS and QSL managed pools
- a Shared Pool component
- individual forward pricing completed (if any).
Movement over the season in sugar and currency markets impacts the value of pools, and pool returns are not final until the end of the season – which means the final value may vary from the monthly updates you receive. The closer we get to the end of the season, and the more sugar that is priced in a particular pool, the more accurate the monthly price becomes.
Throughout the season, pool prices are published monthly on the QCS website and via email.
* Mossman and Tablelands growers allocate their tonnage differently, and the price received by these growers depends on individual allocations.
1. The QCS Short Term Pool
The QCS Short Term Pool is made up of a number of components, to which QCS allocates tonnage. The Short Term Pool components managed by QCS are:
- QCS Growth
- QCS Actively Managed
- QCS Floor
The other component of the QCS Short Term Pool is the QSL Harvest Pool, which, under its agreement with QSL, QCS is required to allocate tonnage to.
The QCS-managed components are structured to enable comparison with similar products from other sugar marketers. You might wonder why this is important, when your Short Term Pool tonnage is allocated by QCS. In the future, grower choice legislation will enable you to nominate a marketer for your GEI sugar. In time, you may have a wide choice of marketers, in the same way that Australian grain growers do. We want you to understand how QCS, as your current marketer, is performing, so when you consider future marketing options you can compare the returns on offer against those you have been receiving from QCS.
For the 2017 Season, QCS is currently outperforming QSL by around AUD 37 per IPS tonne of sugar (as at 31 August).
2. The Shared Pool
The Shared Pool is a combination of US Quota pricing plus/less QSL and QCS revenues and expenses. Revenues applied to the Shared Pool include (for example) regional and quality premiums. Expenses include storage and handling, banking and financing, ocean freight, marketing and other costs.
Shared Pool returns are applied to around three per cent of your total tonnage for the season.
3. Forward pricing
The third element of your return for the season is the price achieved for the forward pricing – if any – that you undertook in previous seasons for sugar produced in the current season.
Forward pricing (or long-term banded pricing, as it is known to growers supplying Mackay Sugar) is optional, and enables growers to price a proportion of estimated production for up to three seasons ahead of the current season.
Growers can nominate their own pricing levels within $15 bands (known as Grower Individual Pricing Orders or GIPO), or can elect to have the MSL Board choose their pricing levels (this is called ‘MSL to decide’).
The price each grower receives for forward-priced sugar depends on that grower’s pricing decisions. Once you forward price sugar for a particular season, the priced sugar must be supplied in that season or the pricing has to be unwound, which may be at a cost to you.
If you have any questions about pricing, please give us a call on 1800 774 246.