CME to launch new Black Sea grain futures with Platts

CME Group, one of the world’s largest derivatives exchanges, will next month launch Black Sea wheat and corn futures based on Platts’ price benchmarks to extend its presence in a booming export region.

The cash-settled contracts will begin trading on December 18, subject to regulatory clearance, the Chicagobased exchange said.

The wheat contract will be based on the Platts Russian Wheat 12.5 percent protein free on board (FOB) Black Sea Deep Water daily price assessment.

CME launched a Black Sea wheat contract based on physical delivery in 2012 but it has struggled to gain traction and there are currently no open positions.

That contract was based on delivery in designated Russian, Ukrainian or Romanian ports and some traders have said a market based on a single origin might prove more attractive.

“I think it could have a better chance of success than the previous contract with physical delivery, especially among houses trading Black Sea grain who are not based in the region,” a European trader said.

The corn contract will be based on the Platts Ukrainian Corn FOB Black Sea daily assessment.

The Black Sea crop region, which encompasses Russia and Ukraine, is set to extend its export reach further in the 2017-18 period as Russia shifts a record wheat harvest.

The region’s growing stature on global grain markets has fueled interest in pricing tools.

The contracts will be denominated in US dollars, have 50-ton lots and be tradeable for off-screen deals with a minimum of five lots.