Swap

A swap may be suitable if you require the security of a fixed price for your commodity for an agreed future date. By receiving a fixed commodity reference price you can budget and plan with more certainty.

Benefits

• Price protection - receive a guaranteed fixed price for an agreed quantity of a commodity on an agreed future date.
• Customisation - you determine the quantity of the commodity you want to cover, the timeframe and the price protection level that suits your needs.
• Simplicity - do the transaction in the currency of your choice. By transacting in Australian dollars, you eliminate the need to hedge the associated foreign currency exposures.

Points to consider

• The transaction does not cover the basis risk, which is the risk arising from entering into the transaction not being identical to the risk being covered.
• You cannot benefit from favourable commodity price movements.
• There may be a cost if the transaction is terminated prior to the termination date.

For an example of how a swap works, click here.

Important information about advice
As this advice has been prepared without considering your objectives, financial situation or needs, you should, before acting on the advice, consider its appropriateness to your circumstances. View our  Financial Services Guide (PDF 59kb).

View Product Disclosure Statements (PDSs) for  Agricultural Swaps (PDF 248kb) issued by the Commonwealth Bank of Australia, and consider it before making any decision about the product.