Friday, March 29, 2024

OMF New Zealand Dairy Futures report – October 25, 2013

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First the quotes…..now the depthCurve starts to flatten – back end too good to ignoreSaputo ups bid for Warrnambool   COMMENTARY In addition to the tightening of quotes, particularly in WMP, we are starting to see depth improve as well.  By depth we mean the number of bids and offers above and below the market.  This is another sign of both confidence and growth. The old saying volume breeds volume and there has been a number of “successful” trades undertaken which will bring the players back to the market.  We are starting to see ongoing buying interest in the back end of the WMP curve; no surprise given the steep backwardation.  The trade yesterday in April at $4500 has seen the December to April spread move from $500 to $420. We think the spread will continue to contract.  Saputo has upped its bid for Warrnambool to $8 but given the price of the stock is trading, $8.15, there is still plenty of fight left in this battle.  Warrnambool may be tempted however to accept given its almost 50% above September price levels but we would not be surprised to see Murray Goulburn and Bega Cheese re-enter the fray.  There is concern domestically about giving cash-rich Canadian based Saputo a foothold in Australasia
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