Source: Ukragroconsult (Ukraine)
CME Group is in the process of planning to introduce a new futures contract for Black Sea wheat, which will monitor the grain prices in Romania and Bulgaria. This decision comes in response to the evolving market landscape following the suspension of Russian wheat futures trading due to the ongoing conflict in Ukraine.
Over the past few years, both Romania and Bulgaria, as members of the European Union, have notably boosted their grain exports. The anticipated futures contract will be linked to an export price index for wheat containing 12.5% protein within the designated CVB zone, which includes the Romanian port of Constanta and the Bulgarian ports of Varna and Burgas.
Traders have indicated that the proposed contract will involve cash settlements only, with no physical grain delivery required. Bidding will occur in units of 50 metric tons, with prices quoted in US dollars. CME is hopeful that this new futures offering will be available prior to the summer harvest.
It remains uncertain whether CME will grant final approval for the contract in its current state, as adjustments to its specifications may occur. Officials from CME mentioned that the company frequently engages with clients regarding risk management, but they refrained from discussing specific developments related to this product.
The introduction of this new futures contract is seen as a response to the increasing demand for wheat from Romania and Bulgaria, which has been bolstered by favorable harvest conditions and competitive pricing. Additionally, the war has created instability in grain supplies from Russia and Ukraine, alongside a poor harvest in France last year, leading to heightened interest from buyers in alternative markets.
The United States continues its diplomatic initiatives to resolve the ongoing conflicts, which could help stabilize the Black Sea wheat market. Simultaneously, CME is actively broadening its range of grain products, including launching new U.S. spring wheat futures and contracts for spread trading between CME and Euronext.