Transcript Slide 1

WAW FUTURES
AAAC OUTLOOK
Nov 2009
W Mark Martin
0429 462000
Disclaimer
• General Advice:
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not take into account your individual goals, risks or financial situation.
You should seek individual advice as to the appropriateness of this
information to your business.
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any advice has been prepared without taking into account specific
objectives, financial situation or needs. The information in this document
is general information only. It is proprietary and must not be distributed
without prior permission from MarketAg.
$$$$
NSW ASX Wheat Contract
550
1400
500
1200
450
Too many
drought
years
CBOT Wheat
vs APW Wheat Port Newc
400
•Drought 3 from 5 yrs
1000
CBOT Wheat (U.S.c/bu)
APW Wheat
CBOT Wheat
800
Wheat A$/t
350
300
600
250
CBOT
400
200
200
150
APW Newc
100
0
•CBOT explosion
•Many but fragmented
end users
•Lack of brokers
•Lack of application
8
t-0
Oc
8
r-0
Ma
7
g-0
Au
7
b-0
Fe
6
l-0
Ju
5
c-0
De
5
y-0
Ma
4
t-0
Oc
4
r-0
Ma
3
g-0
Au
3
n-0
Ja
2
n-0
Ju
1
v-0
No
1
r-0
Ap
0
p-0
Se
0
r-0
Ma
9
g-9
Au
9
n-9
Ja
8
n-9
Ju
7
v-9
No
7
r-9
Ap
6
p-9
Se
6
b-9
Fe
5
l-9
Ju
4
c-9
De
4
n-9
Ju
3
v-9
No
3
r-9
Ap
2
p-9
Se
2
b-9
Fe
It’s all About WA Wheat
WA – World’s 8th largest
wheat exporter ……WOW
Who said don’t mention the WAW?!
WAW – WA ASX Wheat Contract
Contract Details
Contract Pricing
Contract Users
WAW Futures Contract Specs
WAW Option Contract Specs
ASX Specs ie Trading Hours
* These hours may be revised by ASX in the near future. Thought is being given to
removing the gap between sessions and bringing the close forward by half an hour.
WAW Track Price v FIS Cash Price
Details
Futures Track Price
+ Protein
Adjustment
+ Receival Fee
Value
Explanation
$200
As traded and quoted on ASX
(is the settlement price on the day of delivery)
$3
Assuming average quality of 10.5%
$0.60 premium or discount for every 0.1 above 10%
(based on average quality data per Destination Site)
$10
As per the CBH receival fee
If nominating MGC as the destination site.
- Location
Differential
Free In Store Price
$213.00
= ASX + protein premium + receival fee – location
differential (if required)
Gross Shrunk Price
$214.07
= FIS / 0.995 (As per CBH shrinkage)
240
0
230
-5
220
-10
210
-15
200
-20
190
Best APW2 Cash Price
WAW Futures Price
180
170
14 Sep 09
-25
Spread (RHS)
-30
5 Oct 09
26 Oct 09
16 Nov 09
Who Uses WAW
So many basis managers
WA Wheat Basis – Now Manageable
2008
2009
550
400
20
+$20
500
40
+$20
20
350
0
0
250
-20
200
-40
A$/t
-20
300
A$/t
400
A$/t
A$/t
450
350
-40
300
250
Jan 08
Basis Trending Upward
-60
Mar 08
Kwi Cash FIS (LHS)
May 08
Jul 08
Sep 08
CBOT Dec-08 in A$/t (LHS)
Nov 08
Basis A$/t (RHS)
150
Jan 09
-60
Mar 09
Kwi Cash FIS (LHS)
May 09
Jul 09
Sep 09
CBOT Dec-09 in A$/t (LHS)
Nov 09
Basis A$/t (RHS)
“What will it Take?”
• Variable Application
• Increased Volume
• Wheat Growers
• More Brokers
• Market Makers
• Traders
• Exporters (they are end user)
• Investment Funds
• Specs
ASX Futures – a Growing Market
ASX
Western Australia Wheat (WAW) Futures
Volume & Open Interest
200,000
Annual Volume
4,000,000 mt
2,000
1,750
Volume (contracts)
120,000
80,000
40,000
1,500
1,250
2003/2004 2004/2005 2005/2006 2006/2007 2007/2008 2008/2009
Year
(May - April)
12,000
10,000
1,000
6,000
750
4,000
500
2,000
250
0
14,000
8,000
0
Sept
Oct
Nov
14-Sep-09
15-Sep-09
16-Sep-09
17-Sep-09
18-Sep-09
21-Sep-09
22-Sep-09
23-Sep-09
24-Sep-09
25-Sep-09
28-Sep-09
29-Sep-09
30-Sep-09
1-Oct-09
2-Oct-09
5-Oct-09
6-Oct-09
7-Oct-09
8-Oct-09
9-Oct-09
12-Oct-09
13-Oct-09
14-Oct-09
15-Oct-09
16-Oct-09
19-Oct-09
20-Oct-09
21-Oct-09
22-Oct-09
23-Oct-09
26-Oct-09
27-Oct-09
28-Oct-09
29-Oct-09
30-Oct-09
2-Nov-09
3-Nov-09
4-Nov-09
5-Nov-09
6-Nov-09
9-Nov-09
10-Nov-09
11-Nov-09
12-Nov-09
Contracts Traded
160,000
WAW
approx. 300,000mt
traded; open int. is
230,000mt & growing
WAW trading activity is up
40% on this time
last year &
Date
is averaging 21,000mt/day
Source: ASX
Volume
Open Interest
0
Open Interest (contracts)
ASX Grain Futures and Options
Annual Volume
Why Will it Occur?
Investment Funds
Specs
Growers
Traders
Exporters
Brokers
CBOT Wheat Futures Loosing
Their Relevance?
A$100/mt
A$35/mt
Source: CME & MGEX
It’s Happened Elsewhere - JSE
2,500,000
215,000,000mt
2,000,000
contracts
1,500,000
1,000,000
500,000
Yes …Mention the WAW
JSE – wheat futures vol
5 times physical crop
WA wheat = 8,000,000mt
What if WAW traded 5X
WAW = 40,000,000mt
if so
WAW = WOW!!!!