CME to launch new Black Sea grain futures with Platts

13.11.2017

CME Group is to launch next month Black Sea wheat and corn futures based on S&P Global Platts' price benchmarks to target the fast-growing exporting region.

The cash-settled Black Sea Wheat FOB (Platts) and Black Sea Corn FOB (Platts) futures contracts will begin trading on Dec. 18, subject to regulatory clearance, the Chicago-based derivatives exchange said on Monday.

The wheat contract is based on the Platts Russian Wheat 12.5 percent protein FOB (free on board) Black Sea Deep Water daily price assessment, while the Black Sea Corn contract is based on the Platts Ukrainian Corn FOB Black Sea daily assessment, CME said in a statement.

Like in Australia, where CME this year launched wheat derivatives based on a Platts price index, the Black Sea contracts will be available for trading via CME's Globex futures platform and for clearing through CME Clearport for off-exchange trades.

The Black Sea contracts would also offer two settlement periods, whereby 12 whole-month contracts and 24 half-month futures contracts are available to trade.

A CME spokeswoman said this was tailored to local market practices where two-week shipping windows are common.

The Black Sea region, which includes the world's biggest wheat exporter, Russia, has increasingly attracted interest for developing price references.

The CME spokeswoman said the group would maintain its existing Black Sea grain futures that offer physical delivery. The contracts have attracted minimal volume.

The new Black Sea products extend CME's reach in grain markets, after its launch last year of a European Union wheat contract, and also marks a push to cater for derivative deals not traded on exchanges.

Euronext, whose France-based contract is the benchmark for the western European wheat market, is also looking at Black Sea derivatives.


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