matif or winnepeg? hedging australian canola gta advisory ... · matif or winnepeg? hedging...

Matif or Winnepeg? Hedging Australian Canola

GTA Advisory & Compliance Workshop 27th July 2015

Overview

❶ Introduction ❷ Trade flows ❸ Political Risk ❹ Basis Risks ❺ Know your client ❻ Matif or WPG

Introduction

• LSC is a commodity advisory and research information business. Working with grain, dairy and livestock farmers. Transport operators, consumers, exporters and investment banks.

• Founded in 2007. • 2 Directors; Lachie Stevens (Oilseed Trader LDC) &

Tim Glass (Director Commodities NAB & Wheat trader AWB).

• 7 Employees.

Trade Flows - Production

Trade Flows - Consumption

Political & Destination Risk • China Black Leg (Albany, PAD & Wallaroo) • China Phyto (EU and Ukraine) • China Oil & Seed reserves • Canadian Rail network bottleneck 13/14 • EU Non-GM & Sustainability restrictions

(Canada). • EU Biofuel mandate. • Barriers to entry or re-entry in Inelastic

markets; Mexico, Japan & Pakistan.

Trade Flows - Exports 2015/16 Bangladesh China EU-27 Japan Mexico Pakistan UAE Other Total Exports

Australia 30 550 400 180 0 225 300 25 1,710Canada 50 2,150 0 2,250 1,350 100 300 750 6,950EU-27 0 0 0 0 0 0 0 300 300Ukraine 0 0 1,230 0 0 200 100 120 1,650Other 0 30 170 0 0 0 0 0 200Total Imports 80 2,730 1,800 2,430 1,350 525 700 1,195 10,8102013/14 Bangladesh China EU-27 Japan Mexico Pakistan UAE Other Total Exports

Australia 0 947 1,493 179 0 214 260 101 3,195Canada 51 3,641 100 2,150 1,221 138 300 992 8,592EU-27 0 0 0 0 108 0 6 163 277Ukraine 1 0 1,700 0 0 230 134 166 2,230Other 0 213 157 0 0 0 0 0 370Total Imports 52 4,800 3,450 2,329 1,329 582 700 1,421 14,6632011/12 Bangladesh China EU-27 Japan Mexico Pakistan UAE Other Total Exports

Australia 15 0 2,023 72 0 162 35 15 2,322Canada 201 2,672 214 2,277 1,504 559 694 854 8,974EU-27 0 0 0 1 0 0 0 123 124Ukraine 3 0 1,036 0 0 0 0 169 1,208Other 0 28 478 0 0 0 0 0 506Total Imports 219 2,700 3,752 2,349 1,504 721 729 1,160 13,134

Basis 2011-12

Basis 2013-14

WPG-Matif Spread

Know Your Client Above Budget Prices Works with proximity to local market Production Risk is OK Have experience in using derivatives Risk profile is suitable Local physical / derivative market not

appealing Ready to choose the instrument; WPG or

Matif.

WPG or Matif Know the S&D What should the trade flow look like Know how the triangle is pricing Be wary of political impacts Be mindful of logistical impacts