Baltic Exchange exploring new freight indexes for grains

LONDON (Reuters) – The Baltic Exchange is looking into launching freight indexes for grains and liquefied natural gas (LNG) as the London-run business targets new markets after its acquisition by Singapore Exchange last year, the Baltic's chief executive said.

Founded in 1744 as a forum for chartering vessels, the Baltic Exchange now produces benchmark indexes for global shipping rates and owns a trading platform for the multi-billion dollar freight derivatives market. SGX's ownership of the Baltic has enabled the exchange to set its sights on developing new areas, especially in Asia – a region which is set to drive seaborne trade going forward, the Baltic's CEO Mark Jackson told Reuters.

"They (SGX) are looking at a long-term goal – this is about improving the maritime footprint in Asia and the Baltic is a vehicle for them to do that," Jackson said in an interview. "They are looking at me to give them a return on their investment."

SGX completed its 87 million pound ($111 million) acquisition of the Baltic in November last year. Jackson, who took the helm earlier this year, said the Baltic was looking into creating a new benchmark route from South America or the United States to China specifically for grains.

Profitability for the world's biggest agri-business players including US group Archer Daniels Midland Co and rivals such as Bunge Ltd has been battered by thinning margins due to a global grain glut. Jackson said the potential for such a freight benchmark for grains would be in providing more volatility, adding it was "a trading opportunity."