This month we have a new format for the monthly contract index update, take a look!

The CFD index rose this month by two contracts, while the FPVV index remained steady on just one contract. The overall impact on the index was that it was slightly pushed down. The total volume of contracts and energy was very low this month, although it is not atypical for this time of year.

Futures prices significantly picked up on 1st September and remain higher today, for reasons that are not entirely clear, however, there are a range of factors that could explain the rise. The obvious one is ongoing concerns about the cost of coal remaining higher for longer. This has been driven by the rebalancing of global coal markets as Europe weans itself off Russian coal and gas: high coal prices combined with a dry year could once again push spot prices very high. The risk and costs (margin calls) of this combination of events may also be causing sellers to price in larger premiums over normal ones, especially in Q2 and Q3.

The leading broker for smaller futures trades, Jarden NZ, started pulling out of futures trading this month because of its clearing participant on the ASX (the large financial player that handled Jarden’s trades is pulling out of this market). This could lead to forced trades as smaller players close out futures positions. Forced trades are not always conducive to fully competitive prices.