How will GDT go? This is a hard call as to what the market will do. Current WMP futures indicate a rise; as mentioned it did that last time only to get it completely wrong. Our view, and it’s really a guesstimate, is that maybe the expected rally in WMP will occur in the October GDT month because C2 purchased then will make Chinese landfall by January, in time for the tariff reduced period. This caught the market long and wrong in January of this year but with WMP prices on GDT half what they were back then suggests buyers may look to take advantage of significantly reduced prices and get a decent “average down”. Time will tell – global production is on target to be ahead of last year which could weigh on prices.
OMF NZ Futures Market report – September 15, 2014
The second GDT for September is tomorrow night. This will be the final leg that will settle the September futures for WMP (and SMP & AMF). At present, basis $2700 in the current WMP September futures versus last C2 of $2600 implies a $2800 price for C2. However futures activity does not necessarily imply GDT reality as last time the futures market was picking a rise of 10% in WMP only to see it fall about 5%. The GDT volumes are down about 12% from last GDT with WMP (and SMP and Butter) the main ones reduced. WMP has been reduced to about 30,000 tonnes down from 36,000 tonnes last auction mainly due to C1 being in the first GDT auction but not in the second however this is still the second best offering for the year. The 12 month forecast for GDT is not much lower than previously forecast.
Reading Time: < 1 minute
