Methodology guide

The Objective

It is our intention to publish weekly price assessments in the LRI report. These price assessments are to reflect the tradable value of the products traded in the open market and thus the actual level of the market. They are to be derived independently, impartially and in a transparent manner.

To start with, we will concentrate our efforts predominantly on the price assessments for the benchmarks which are marked in the list. Many of the other prices will be derived from these benchmarks.

Benchmarks

We have selected a few individual rice standards that we consider to be of greater importance as other grades are often priced from them. They also tend to be more widely and freely traded and as a result will provide the most robust assessments available.

Assessment Principles

This guide is intended to provide market participants with an understanding of the criteria used to determine the price assessments.

We will monitor activity throughout the week and use all the information gathered or provided in our price assessments. To ensure the price assessments are as robust as possible we will consider the following:

• Quotes
• Offers
• Bids
• Contracts concluded
• Market information and intelligence from discussion with market participants.

Our aim is to determine the full circumstances surrounding any contracts, bids or offers including details of quality, specifications, quantity, packing, deliver basis, shipment period, payment terms, documentary requirements and any other terms that may affect the price and to use this information to determine a typical and repeatable market level for each Individual Rice Standard.

We will monitor the spread between different grades and use these in the alignment of our price assessments.

It should be noted, however, that our price assessments do not reflect an average of the contracts, bids and offers reported over the week but are intended to reflect a snap shot of the actual level of the market at the specified time.

Where available our assessments are based on actual transactions and firm bids and offers in the market.

We are in regular dialogue with a broad spectrum of participants in the market including Millers, Traders, wholesalers, packer, sellers, buyers and intermediaries.

We will stay in close touch with market participants and welcome feedback on all aspects of our assessment methodology.

We hope that market participants will want to take an active role in the process, helping to ensure that the price assessments become increasingly robust.

Normalisation

LRI defines specifications and terms for each individual rice standard.

Tradable values are determined by many factors including the specific terms of a contract, offer or bid. Details may vary such as quantity, specification, packing, delivery method (for example, container or breakbulk, FOB or CFR), shipment timing, payment terms, documentary requirements, load or discharge rate.

Where the terms of a contract, bid or offer vary from the standard, we may use our judgement to factor out the variations or disregard it from our assessment process.

Many of the differentials are known or can be calculated. By applying these to the price, we will seek, where possible, to align the terms with our assessment terms. They may be taken in to consideration in the assessment process after normalization.

We will consider all relevant information provided on individual transactions to determine the true and accurate market value of the product reflected, and will strip out any unusual terms or conditions.

Transparency/Robustness

Different markets have different levels of transparency. We under- stand this and will use our judgement to base our assessments on the information that is the most robust.

We expect transparency to improve over time, resulting in improved information and more detailed verification and disclosure.

We will endeavour to confirm all information on deals, bids and offers provided to us.

Where possible we will base our assessment on the information that is the most robust.

Time of Assessment

In our price assessments, we aim to reflect the tradable value of the products traded in the open market and thus the actual level of the market.

For Asia, at close on the day preceeding the day of publication or the day preceding a holiday.

For Europe and Egypt, at midday on the day of publication or the day preceding a holiday.

For North and South America, at 12 noon EST on the day preceding the day of publication of the day preceding a holiday.

Information that may be Disregarded

All information and intelligence received and provided will be considered for its relevance, transparency and robustness.

If we have concerns about the reliability of information or the principals, we may disregard it from our assessment processes.

Contracts between related parties or contracts that do not meet our standards for transparency, verifiability and repeatability may not be taken into account.

Offers or bids on non-standard terms that we determine to be restrictive, in the sense of making a deal logistically difficult to execute, may be disregarded in the assessment process. Bids or offers that contain too wide options for either the buyer or seller may likewise be disregarded.

One-off deals or distressed trades at off-market levels will not be reflected in our assessments.

Term contacts or contract for shipment outside the standard shipment window may be excluded from the assessments.