With the introduction of an additional Weizenfutures for Europe, the world's largest wheat growing area, through the CME Group receives the Paris MATIF derivatives exchange competition.
The CME has long worked on the contract before he is released now on September 12 to trade through the Globex - trading on the CBoT. Many formal obstacles made it difficult to win French grain silos as a partner and delivery points for the physical settlement of financial derivatives.
The 50-ton contract will be traded in euro and shall be physically met in France. The central place of delivery is Rouen, Europe's largest grain transshipment. Until there's a guide for carrying out, it took a long time, but you wanted to do right rather than quickly to start the contract specification. So far, five companies have submitted a request to authorize twelve delivery places as settlement agents for the stock market. The storage capacity of all 12 silos is about 500,000 tons.
The delivery locations are located in Northern France inland – they get an individual freight discount after Rouen - while the Euronext contract is handled directly on the port places Rouen and Dunkirk. With the CME contract, you can either purchase the grain themselves or receive a stock certificate, which is traded as securities.
The delivery model of the CME differs so significantly from the Euronext. Dealer had on the Euronext criticism again and again, that the port places to little storage capacity and prices fair reflected not always the market situation in Europe. That was true in particular for the rain year 2104. The Euronext announced yesterday that the needs of the market are considered better from next season. In this year, but again too much rain the grain quality in France at risk.
The first of the CME EU wheat futures contract is already in December 2016 for processing. The contract specifications call for 10.5% protein, 170 sec. Case number and a specific weight of 74 kg / HL. That should ensure that it is a quality of bread wheat.
The Euronext does not have such specifications in the front maturities of their futures contracts yet, but from the coming year 11% protein and a number of cases of 220 sec after the Hagberg table are required.
The CME turns out his EU wheat contract on the CBoT Globex trading platform is traded, where two more global traded Getreidefutures are offered. The margin requirements might fall for arbitrageurs. Also, the CME wanted charge no exchange fees in the first six months to promote liquidity.
