Futures contract for delivery of the Black Sea wheat originating from Ukraine, Russia and Romania has been traded on one of the world's largest electronic trading platforms - Globex, a part of CME Group -  for 2 months now.  The trading of the new Black Sea Wheat (BSW) commodity contract began June 6, 2012.

UkrAgroConsult experts say that during the second month of the trading the Black Sea wheat futures contract was more active than during the first one. For the period of July 6 - August 3, 2012 change in quotations for the BSW contract occurred six times, whereas for the period of June 6 - July 6 - only 2 times. As a result, the futures price on the Black Sea wheat with delivery in September 2012 rose to 310 dollars. During July 2012 Black Sea futures gained 21.56%. For comparison, the growth of futures prices for U.S. wheat for the month was 17.29%.

The reasons for the growth of futures prices were estimates reduction of grain production in the Black Sea region (Ukraine, Russia, Kazakhstan), as well as increased demand for grain from the Black Sea region by the importers.
Activation of trading on the Black Sea futures contract market has led to increased public interest. Although the amount of open interest is still considered small (9-10 contracts), and liquidity - low, there is increasing interest in the BSW contract from market operators.

Commodity market analyst “UkrAgroConsult”, tracking price movements in the exchange and spot markets for the products of different origin, suggests that the basis for changes in futures prices on Black Sea wheat is the price of grain on the spot market. The practice of agricultural products trade on exchanges in the Black Sea region and the methods of insurance of various risks through exchange mechanisms are not developed and widespread. Therefore, the reduction in wheat production estimates in the Black Sea region and the world against the drop of grain offers from other grain-exporting countries is transformed into the increase in spot prices and futures prices for the contract BSW follow their dynamics.

UkrAgroConsult in its issues publishes daily and weekly commentary on the Black Sea wheat futures trading, calculates the historical basis for wheat originating from Ukraine, Russia and Romania, provides a forecast of the further development of the Black Sea region grain spot market, as well as possible exchange strategies for different groups of market operators (producers, traders, processors, etc.) based on the current situation in the world, regional and stock grain markets  (http://www.blackseagrain.net/newsletters-daily-reports/subscribe).

The issue of grain futures market will be addressed at a roundtable, held in the framework of the Vth International Conference "Agricultural investment – 2012. Inputs", which "UkrAgroConsult" holds November 8, 2012 in Kiev at the "President Hotel".

UkrAgroConsult