CME Group to launch CBOT Black Sea Wheat Futures

by Eric Schroeder
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CHICAGO — CME Group announced that CBOT Black Sea Wheat Futures will begin trading on June 6, subject to regulatory approval. The launch of the contracts is an extension of the memorandum of understanding that was initiated last year by Leo Melamed, CME Group chairman emeritus.

“This is an important next step for CME Group as it relates to our new market development efforts in Eastern Europe,” Mr. Melamed said.

Tim Andriesen, managing director of agricultural commodities and alternative investments at the CME Group, added, “Now more than ever the world relies on the Black Sea region to produce wheat and other grains to meet our growing global demand for food. That’s why beginning in June, CBOT Black Sea Wheat Futures will become the first hedging tool to offer regional market participants effective price discovery and risk management. We firmly believe this contract will not only establish an effective forward market for regional wheat prices, but has the potential to develop into a true regional benchmark pricing tool for wheat.”

Wheat produced in the Black Sea region has accounted for more than 20% of global exports in recent years, according to the CME Group.

“This resurgence, coupled with increased price volatility in the region has underscored the need for an effective hedging tool with strong correlation to the Black Sea wheat cash market,” the CME said.

Once all regulatory approvals have been granted, Black Sea Wheat Futures will be listed on CBOT and available for trading electronically on CME Globex, beginning with the first listed month of July 2012. The contract will be U.S. Dollar denominated and will be 136 tonnes per contract, similar to benchmark CBOT Wheat futures. Designated delivery points for the contract will be in Russian, Ukrainian and Romanian ports on the Black Sea, the CME Group said.

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