CME Group Enters European Wheat Futures and Options Market in September

The U.S. headquartered futures exchange bolsters liquidity in a key soft commodity with the launch of EU wheat contracts.

One of the leading futures and options trading venues, the Chicago headquartered CME Group, has announced that it is aiming to launch physically delivered wheat futures and options in Europe. Trading on the contracts will begin on the 12th of September 2016, pending regulatory approvals.

The contracts which will be delivered in Europe will be listed under the rules of the Chicago Board of Trade (CBOT).

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The company engaged in thorough market research before announcing the launch of the contracts. The main reason for the rollout as cited by the CME Group is that clients are looking for additional risk management tools that are better suited to the peculiarities of storage practices in the European Union.

Both the wheat futures and options contracts will be denominated in euros with the price being formed relative to the Rouen market.

Bolstering Liquidity

The Managing Director of Agricultural Products of the CME Group, Tim Andriesen, commented on the announcement: “Our Soft Red Winter and Hard Red Winter Wheat futures are the global benchmarks of the physical grain industry, facilitating price discovery and a robust spread market for our customers’ hedging needs around the globe.”

“The addition of these new EU Wheat contracts to our existing suite of Wheat futures and options further positions CME Group and our CME Globex trading platform as the global destination for wheat trading and risk management,” he elaborated.

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Wheat traders may also look for arbitrage opportunities and margin offsets between EU wheat futures and options and the existing product line of wheat futures and options already available.

CME Group’s new EU Wheat contracts, will be additional valuable tools to enable liquidity

The Head of Grains for the North America region at Louis Dreyfus Company, Steve Campbell, added: “We were requested to be actively involved in the development of these contract specifications, and believe they will be well aligned with our hedging strategies.”

“As a leading global merchant and processor of agricultural goods, we closely monitor international agricultural markets to effectively manage price volatility throughout the supply chain. CME Group’s new EU Wheat contracts, together with the Chicago Soft Red Winter and KC Hard Red Winter Wheat products, will be additional valuable tools to enable liquidity, helping us to manage global wheat price volatility better across our operations,” he elaborated.

Contract Specs

A single contract will represent 50 metric tonnes of physical EU wheat, which will be deliverable from various storage locations in France. The quality specifications are set at a minimum of 10.5 percent protein and 170 hagberg. The first listed contract will be for delivery in December 2016.

A single contract will represent 50 metric tonnes of physical EU wheat

Just like the regular wheat contracts, EU Wheat futures and options contracts will be available for electronic trading via CME Globex. The trading hours are different, with the session starting at 10:30 a.m. and ending at 6:35 p.m. Paris time (CET).

The EU wheat options contracts will also be available for trading on CME Group’s Chicago trading floor between 8:30 a.m. and 11:35 a.m. CDT.

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