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MSF Optional ICE11 Pools

An overview of the optional ICE11 pools offered to growers by MSF

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MSF Optional ICE11 Pools

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  1. MSF Marketing – Optional ICE 11 Pricing Pools 26 February 2015 – Mulgrave

  2. 2014 Marketing Plan Update

  3. Pricing Pool Update • Table showing ICE 11 pool prices (% priced, average price achieved and MTM) • Include MGSP/MRSP as appropriate but show “uplift” separately • Also include relevant regional Collective FPP for 2015 and 2016 seasons • Benchmarks???

  4. The 2014 Season Marketing Plan was adjusted to take advantage of ICE 11 spreads

  5. Amendments to the Marketing Plan added circa $1.8M to the Late Season Pool or $15.75 per tonne Rolling window (29/7 – 19/9) Mean = 0.96 USc/lb (US$21.16/tonne) Average result = 1.8 USc/lb (US$39.68/tonne)

  6. Agenda

  7. Agenda

  8. Most Mulgrave growers share in pricing already undertaken (Existing Pricing) in the Mulgrave Regional Sugar Pool * Assuming average production

  9. The summary table at the bottom of your historical production data provides essential information

  10. Agenda

  11. Today is all about MSF Marketing’s optional ICE 11 Pricing Pools 2010 Season Actual Results $ per tonne of cane ICE 11 pricing pool outcomes 11

  12. Higher level slide for 3 pool components

  13. QSL pool price components • Un-committed sugar(minimum 35%) • Gross Price Element Committed sugar (maximum 65%) Committed ICE 11 pools Non-ICE 11 pools Harvest Pool (ICE 11) Supplier managed QSL managed QSL Harvest Pool Supplier managed Harvest Pool QSL US Quota Pool Long Term Contract (LTC) Pool QSL Guaranteed Floor Pool QSL Actively Managed Pool QSL 2–Season Forward Pool Refer to mill offerings (includes forward pricing) Shared Pool Element Pool net price

  14. If you elect not to participate in any optional ICE 11 pricing pools your cane price will be determined by the outcome achieved in the Late Season (default) pool

  15. 2015 season poolQSL Harvest Pool From December onwards your payments are aligned to your choice (Harvest Pool) which is predominantly priced at the back end of the season. UNKNOWN TONNAGE Until December you received payments based on the weighted average payment that your mill received (for all of its pools). Production buffer of Harvest Pool priced back end of season Harvest has limited pricing it can do within the season Production Buffer received Pricing Declaration Known tonnage for committed pools Approx. 50% priced All other pools priced throughout year based on known tonnage.

  16. Optional In-season ICE 11 Pricing Pools

  17. Based on average production data, 40% can be allocated to optional 2015 in-season ICE 11 pricing pools (less any Cane Pay Sugar already allocated to 2015 Commitment Pools)

  18. The 2015 Guaranteed Floor Pool provides a guaranteed minimum return for the ICE 11 component of the Final Sugar Price with the potential for higher returns • MSF has the ability to set a known minimum price at the conclusion of the Allocation Period (27 Mar) and provides scope for limited participation in upwards market movements across full season • Removes risk of downward market moves post 27 Mar

  19. Current Market Price current market value of sugar if you outright price today Strike Price the market level at which you begin to participate in price rises Absolute floor minimum price the pool will achieve including the cost of insurance paid to secure the floor Participation rate the amount of participation in price rises above the Strike Price 50% participation means for every dollar ($1) the market trades above the strike the pool participates 50 cents How to interpret 2015 Guaranteed Floor Pool price indications on MSF’s website

  20. Pool Manager Discretion and Passive Management Benchmark • Pricing according to benchmark using no discretion means that the pool should achieve the average price of the market during its life • A pool manager may delay pricing where he or she has the view that prices may be better later on, or increase pricing if they believe prices will go down in the future

  21. 2015 Seasonal Pool 21

  22. Optional Forward-season ICE 11 Pricing Pools

  23. Current production risk exposure limits allow 23% to be allocated to optional 2016 forward-season ICE 11 pricing pools (less any Cane Pay Sugar already allocated to 2016 Commitment Pools)

  24. Individual Forward Pricing Pool 24

  25. Agenda

  26. How do you participate in optional ICE11 Pricing Pools? Important Information • Optional ICE11 Pricing Pools (Commitment Pools) carry Cane Pay Sugar quantity obligations • US Quota and Existing Pricing is prioritised • Quantity obligation shortfalls can result in a financial loss or gain for the grower • The amount of Cane Pay Sugar you are able to allocate is governed by Production Risk Exposure Limits • These limits determine Cane Pay Sugar pricing scope and aim to reduce the probability of not being able to meet your quantity obligations • If you choose not to participate in an optional ICE11 Pricing Pool your cane price will be determined on the basis of the MSF Late Season and US Quota Pool outcomes. • But still receive a share of existing pricing

  27. How do you participate in optional ICE11 Pricing Pools? What • The option to allocate Cane Pay Sugar to ICE 11 Pricing Pools where another party makes ICE 11 pricing decisions and/or ICE11 Pricing Pools where you make pricing decisions. How? • First you need to enter into a Grower Pricing Agreement with MSF • A completed Authorised Person form is also required • Both of these documents are available from Catherine Schutt • Secondly you need to know how much Cane Pay Sugar you are able to allocate • This information has been provided • The process requires you to allocate Cane Pay Sugar to the pool during the Allocation Period using a form provided by MSF • By allocating Cane Pay Sugar to the pool you agree to the pool terms • Copies of Pool Terms are available today

  28. Agenda

  29. Key Points and Dates Several optional ICE11 pricing pools are available from which you can choose • All optional pools carry a quantity obligation • Participation in ICE11 Pricing Pools is subject to Pool Terms To choose between ICE11 pricing pools it is necessary to enter into a Grower Pricing Agreement (GPA) • A single GPA enables a grower to allocate Cane Pay Sugar to multiple optional ICE 11 pricing pools If you are not planning to participate in any of the optional ICE 11 pricing pools you do not have to do anything • your cane price will be determined using the MSF Marketing Late Season, US Quota pool and existing pricing outcomes Cane Pay Sugar allocations to 2015 in-season Pricing Pools close 27 March 2015 29

  30. 2017 Season

  31. Thank You

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