Tim spoke about the role of price reporting agencies (PRAs) and the advantages they bring to modern markets. PRAs rely more on “old-school” methods rather than technological solutions.
The primary role of PRAs is to “research, write and distribute original market-moving news and trade intelligence, and to provide reliable physical price indices in key locations that can be used for everything from trade negotiations to physical contracts to derivative instruments that are designed to better manage risk.”
Agricensus began covering corn, wheat and soybeans in 2017, and has expanded to vegetable oil and meal among others. The agricultural sector has been attracting attention from older, more established PRAs recently.
In addition to price indices, PRAs produce detailed market commentary that explains what has happened during the course of the trading day, as well as news reporting that puts prices and markets into context.
PRAs are independent organizations that do not take or hold any position in the markets and which have no vested interest in any counterparty, price or traded volume. Their only obligation is to provide an impartial price assessment. PRAs are regulated by both the G20 through IOSCO and the EU.
Around one-third of Agricensus’ 750 price indices are actually assessed, based on actual bids, offers and trades. Another one-third is derived from those assessments, such as differentials, and the final third are calculated assessments, such as delivered (CFR) or FOB prices, crushed margin assessments, etc. Assessments are normally made in US dollar terms, but can be converted to 17 local currencies.
In addition to prices, Agricensus has created a variety of dashboards for insight into individual countries, imports and exports data, statistics, trades, and stock levels.
Worledge introduced the Agricensus Tender Dashboard, which aggregates data on buying tenders from around the world for analysis. The tender process is seen as a price discovery process for often opaque bulk buying volumes that can influence pricing for the wider market.
Countries such as Saudi Arabia, South Korea, Egypt are among the largest buyers of agricultural products via tender. Agricensus has built a database of 1053 tenders or private purchases. The data covers 3398 cargoes totaling 144.6 million tons.
This data is gathered through standard PRA journalistic processes; it does not capture tenders that are not concluded. The data also generates insights into underlying fundamentals: for example, it reveals the growth of Brazil as a source of corn for South Korea as US prices have become less competitive; it also shows the ebb and flow of specific companies as dominant participants in individual markets.
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