waw futures aaac outlook nov 2009
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WAW FUTURES
AAAC OUTLOOKNov 2009
W Mark Martin0429 462000
Disclaimer• General Advice:
The information contained in this seminar is General advice and does 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.
• Disclosure: MarketAg Pty Ltd, FSR Lic 325936 is authorised to provide financial product advice for derivatives and foreign exchange contracts. MarketAg and its advisors 1) Have no conflict of interest regarding the recommended service or product 2) Offers the best possible advice for your business at that time based on the information provided.
• Disclaimer: MarketAg, any associated companies, its officers & employees advise that they shall not be liable in any way whatsoever for any loss or damage arising out of or in connection with the contents of this information provided. This information is general information only and 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
CBOT Wheat vs APW Wheat Port Newc
100
150
200
250
300
350
400
450
500
550
Whea
t A$/t
0
200
400
600
800
1000
1200
1400
CBOT
Whe
at (U
.S.c/b
u)
APW Wheat
CBOT Wheat
Too many drought years •Drought 3 from 5 yrs
•CBOT explosion
•Many but fragmented end users
•Lack of brokers
•Lack of application
APW Newc
CBOT
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
* 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.
ASX Specs ie Trading Hours
WAW Track Price v FIS Cash Price
= ASX + protein premium + receival fee – location differential (if required)
$213.00Free In Store Price
= FIS / 0.995 (As per CBH shrinkage)$214.07Gross Shrunk Price
If nominating MGC as the destination site.- Location Differential
As per the CBH receival fee$10+ Receival Fee
As traded and quoted on ASX
(is the settlement price on the day of delivery)$200Futures Track Price
$3
Value
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)
+ Protein Adjustment
ExplanationDetails
= ASX + protein premium + receival fee – location differential (if required)
$213.00Free In Store Price
= FIS / 0.995 (As per CBH shrinkage)$214.07Gross Shrunk Price
If nominating MGC as the destination site.- Location Differential
As per the CBH receival fee$10+ Receival Fee
As traded and quoted on ASX
(is the settlement price on the day of delivery)$200Futures Track Price
$3
Value
Assuming average quality of 10.5%
$0.60 premium or discount for every 0.1 above 10%
(based on average quality data per Destination Site)
+ Protein Adjustment
ExplanationDetails
170
180
190
200
210
220
230
240
14 Sep 09 5 Oct 09 26 Oct 09 16 Nov 09
-30
-25
-20
-15
-10
-5
0
Best APW2 Cash Price
WAW Futures Price
Spread (RHS)
Who Uses WAW
So many basis managers
WA Wheat Basis – Now Manageable
250
300
350
400
450
500
550
Jan 08 Mar 08 May 08 Jul 08 Sep 08 Nov 08
A$/t
-60
-40
-20
0
20
A$/t
Kwi Cash FIS (LHS) CBOT Dec-08 in A$/t (LHS) Basis A$/t (RHS)
Basis Trending Upward
150
200
250
300
350
400
Jan 09 Mar 09 May 09 Jul 09 Sep 09 Nov 09
A$/t
-60
-40
-20
0
20
40
A$/t
Kwi Cash FIS (LHS) CBOT Dec-09 in A$/t (LHS) Basis A$/t (RHS)
2008 2009
+$20
+$20
“What will it Take?”• Variable Application• Increased Volume• Wheat Growers• More Brokers
• Market Makers• Traders
• Exporters (they are end user)• Investment Funds
• Specs
ASX Grain Futures and OptionsAnnual Volume
0
40,000
80,000
120,000
160,000
200,000
2003/2004 2004/2005 2005/2006 2006/2007 2007/2008 2008/2009
Year(May - April)
Cont
racts
Trad
ed
ASXWestern Australia Wheat (WAW) Futures
Volume & Open Interest
0
250
500
750
1,000
1,250
1,500
1,750
2,000
14-Se
p-09
15-Se
p-09
16-Se
p-09
17-Se
p-09
18-Se
p-09
21-Se
p-09
22-Se
p-09
23-Se
p-09
24-Se
p-09
25-Se
p-09
28-Se
p-09
29-Se
p-09
30-Se
p-09
1-Oct-
092-O
ct-09
5-Oct-
096-O
ct-09
7-Oct-
098-O
ct-09
9-Oct-
0912
-Oct-
0913
-Oct-
0914
-Oct-
0915
-Oct-
0916
-Oct-
0919
-Oct-
0920
-Oct-
0921
-Oct-
0922
-Oct-
0923
-Oct-
0926
-Oct-
0927
-Oct-
0928
-Oct-
0929
-Oct-
0930
-Oct-
092-N
ov-09
3-Nov
-094-N
ov-09
5-Nov
-096-N
ov-09
9-Nov
-0910
-Nov
-0911
-Nov
-0912
-Nov
-09
Date
Volum
e (co
ntrac
ts)
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
Open
Inter
est (c
ontra
cts)
Volume Open Interest
ASX Futures – a Growing Market
Source: ASX
WAW trading activity is up 40% on this time last year & is averaging 21,000mt/day
WAW approx. 300,000mt traded; open int. is
230,000mt & growing
Annual Volume 4,000,000 mt
Sept Oct Nov
Why Will it Occur?
Investment Funds
Specs
Growers
Traders
Exporters
Brokers
CBOT Wheat Futures Loosing Their Relevance?
Source: CME & MGEX
A$100/mt
A$35/mt
It’s Happened Elsewhere - JSE
2,500,000
2,000,000
contracts
1,500,000
1,000,000
500,000
215,000,000mt
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!!!!
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