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.

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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!!!!