Argus developer trial trial#
“Even in trial form, it is creating a lot of noise in the market.” “Participation in the trial has been higher than what we had expected,” Tim Jude said. Data is collected and processed weekly by collaborators, Argus, adjusted for breed type, location and other parameters. The indicator was created based on pricing inputs supplied by around 25 industry participants, and was already accounting for ‘some tens of thousands’ of feeder cattle. The company last August set up a ‘trial’ version of the Swaps project to test the system and gather data. StoneX had anticipated around 30 participants for an initial webinar discussing the new Swaps product held last year, and eventually attracted 85. Multiple industry policy and research discussion papers have been posted in the past few years calling for greater transparency in trading across the supply chain.
The fact that there are is now consistently more than one million head of cattle on feed across Australia, alone, suggests the time may be right for the launch of the new Swaps product. Both fell over for a number of reasons, including lack of liquidity, however there has been a lot of water under the bridge for the industry since then, and there is now clear evidence that a growing number of stakeholders are receptive to new risk management tools. Previous hedging tool attemptsĪustralia has seen two failed attempts over the past 30 years to launch a different hedging tool, in the form of a live cattle futures contract.
StoneX’s new Swaps product has been built around 0-2 tooth flatback (50pc or less Indicus content) feeder steers 380-480kg liveweight delivered Darling Downs (300km centred on Dalby).Īn important distinction between the new Swaps index and the EYCI is that the EYCI includes a broad range of breed types, weights and locations, meaning that from a hedging perspective, the correlation can break down quickly.Ī tighter range in the Swaps index is likely to generate more confidence in the trade, the project’s backers say. (Once registered, anyone is welcome to come in and bid or offer themselves, and at that point the new Swaps product will start trading, and we will start to report to participants on where it has actually traded at,” Mr Jude said. “We’ll have bids and offers on either side of the market, as an indicative range of where it is going to trade. “To start with, once the product is launched next month, we will have some bids and offers that we will show to participants involved in the market,” StoneX’s livestock program manager Tim Jude said. Margin facilities may also be provided by StoneX after the program’s launch, meaning participants would not have to tie-up working capital to trade. This eliminates any counter-party risk, and also maintains anonymity between the two parties – an important feature for the cattle and beef industry in Australia, where many players like to ‘hold their cards close to their chest.’ Neither side knows who the counter-party is. In this example, StoneX stands in the middle, meaning the counter-party for both buyer and seller is StoneX. Swaps are paper contracts where the risk is offset between two parties – with equal and opposite risks. So for those unfamiliar with risk management tools, what are Swaps? Other supply chain participants like beef traders and cattle backgrounders could also utilise the product. Others are being on-boarded this month, so that when the product opens, they can start trading. “The industry needs the ability to manage price risk at times like this, and Swaps offer a way to give the market opportunity to take some of that price risk off the table,” he said.Īt launch-time next month, StoneX will announce to the market that the project is live, and that the Swaps product is available for use by stakeholders along the supply chain.įollowing an education and awareness program towards the end of last year, StoneX already has a group of stakeholders – from corporate pastoral companies and larger-scale private beef producers to lotfeeders, processors and large end-users – set up with trading accounts. “Any time a commodity is at the extreme end of the pricing cycle – as beef cattle currently are – is an ideal time to launch a risk management product like this,” StoneX vice president agriculture Nick Orssich told Beef Central. The product will be cash-settled, basis the average of the program’s index figure over that month. The Swaps product will list up to 12 months forward, to provide plenty of hedging opportunity for future price movements. Project developer StoneX* plans to have its new cash-settled Feeder Cattle Swaps product ready for launch around this time next month, after 12 months of development and testing. A NEW beef industry supply chain risk management tool is drawing closer to commercial launch – likely around mid-February.
0 kommentar(er)
