price discovery and reporting - platts sugar price rationale: platts cs brazil vhps for october was...
TRANSCRIPT
PRICE DISCOVERY AND REPORTING
Tim Worledge Delhi, September 2016
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• Analysis enables a view into where the market may go
• Price reporting enables development of financial instruments
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Many of the analytical reports carry Platts prices too:
HOWEVER
PLATTS DAILY PRICES: IN DETAIL
Physical prices Thailand
Physical prices Brazil
Physical prices Europe/ROW
FOREX/Futures prices
Third party prices
All pricing information comes from the market itself
• We contact trading and market sources throughout the day
• We collect and verify individual physical indications and publish them
• Market sources see & hear what we see & hear, in real-time
• With every price, we publish an explanation called a rationale
• In sharing prices, physical information, and other price-specific details, we fully conform with IOSCO principles for price reporting
• We are reviewed annually by a third party to ensure that we remain compliant with those principles
• Robust, transparent prices are essential to market participants
WHERE DO WE GET PHYSICAL PRICE INDICATIONS FROM?
Brazil sugar price rationale: Platts CS Brazil VHPs for October was assessed at a 20-point discount to October NY11 futures on Tuesday, down two points on the day. The narrowing V/H
spread has added a further selling pressure in the prompt market. Bids were reported at V-25 points. Sellers were heard ranging from V-10 points and V-17 points. The value trade was
considered at V-20 points. CS Brazil VHPs for November shipment was assessed at V+5 points, flat on the day. Offers were reported at V+10 points, while bids were heard at V-5 points. The CS Brazil VHPs for December was assessed at V+20 points, down two points on the day. A bid was heard at V+15 points. There were no offers reported. Brazil 150ic Containers for October shipment was assessed at V+$80, down $2 on the day. Offers were reported at H+$73. There were no bids reported. Market sources were considering the trade level around H+$69 and H+$70 The assessment was calculated considering the V/H spread at -47 points at 1630 London time.
RATIONALE
WHY DOES IT MATTER?
are used as reference points in commodity trading and to derive related commodity prices. They:
Achieve
convergence between market
values and
published values
Display
responsible behavior
Fully reflect market
value
Provide full
transparency
DELIVERING BENCHMARK PRICE ASSESSMENTS
Market acceptance
Adhere to international norms of trading
Chain formation high degree of circulation
Lead to the development of a forward market
High degree of transparency
Open to industry scrutiny
Clearly defined assessment methodology
NUTS AND BOLTS OF BENCHMARK ASSESSING
A robust
How data is analyzed to produce a final value
What is being assessed
How data is collected must define
BENCHMARK PRICE REPORTING
Platts Price Assessment Methodology is built on two fundamental principles:
PRICE AS A FUNCTION OF TIME
Time stamps Allow for true reflection of spreads
Platts assessments are time sensitive and clearly time-stamped
Importance of Time Sensitive Data
GLOBAL TIMESTAMPS
Philippines
/Korea ethanol
All sugar
assessments
Europe
ethanol
London 16.30
Brazil/US
ethanol
Houston 13.30 Singapore
16.30
BENCHMARK PRICE REPORTING
With price assessments, not all information can be taken at face value
Bids, offers and transactions in…
Heard & Intra-day pages
Transparent, verifiable price assessments out.
WHAT DO WE ASSESS?
Assessed physical premium
Flat price is premium + contract settlement
ASSESSMENTS ARE PART OF THE STORY…
Physical heard data underpins each assessment
Please find below the latest bid/offers we have heard in the Brazilian sugar market today. We would appreciate it if you would make us aware if you hear anything that contradicts this information, or there are/have been any further bid/offers lodged in the market since.
VHP
BRAZIL SUGAR RAWS: FOB Santos, Bulk, VHP, February 15, Traded "Wed" , H-40
BRAZIL SUGAR RAWS: FOB Santos, Bulk, VHP, February 15, Traded , H-25
BRAZIL SUGAR RAWS: FOB Santos, Bulk, VHP, February, Offer, H-15
BRAZIL SUGAR RAWS: FOB Santos, Bulk, VHP, February, Bid, H-20
Crystal
BRAZIL SUGAR WHITES: FOB Santos, Container, 180ic, February, Traded "Wed", H+$85
BRAZIL SUGAR WHITES: FOB Santos, Container, 150ic, February, Offer, H+$95
BRAZIL SUGAR WHITES: FOB Santos, Breakbulk, 150ic, February, Offer, H+$100
BRAZIL SUGAR WHITES: FOB Santos, Container, 150ic, February, Bid "Wed", H+$88
BRAZIL SUGAR WHITES: FOB Santos, Container, 180ic, February, Offer, H+$86
45ic
BRAZIL SUGAR WHITES: FOB Santos, Container, 45ic, February/March, Offer, H+$12
BRINGING ORDER TO THE INFORMATION
BRINGING IT ALL TOGETHER
Assessed physical prices
Market commentary
Rationale Relevant futures
Related prices
METHODOLOGY DETAILS
www.platts.com/commodity/agriculture/sugar
WHAT WE ASSESS – RAW SUGAR
WHAT WE ASSESS – WHITE SUGAR
