Black Sea Wheat Futures - FYI

[errolanderson]

Beginning tomorrow (June 6), the CME
Globex will begin trading Black Sea
milling wheat futures.

Contract Size: 5,000 bu (136/MT)
Priced in U.S. dollars
Months traded: Jul,Sep,Dec,Mar,May
Physical delivery to designated ports in
Russia, Ukraine and Romania.

The Black Sea region now accounts for
20% of the global wheat export market.
USDA projects this share may increase
toward 30% within the next decade.

[furrowtickler]

Low quality and feed wheats right?

[errolanderson]

Believe this is a milling wheat
contract.

Protein minimum: 11.5%
Weight: min 76 kg/hl
Moisture: 14%
Impurities: max 2%
Bug Damage: max 1.5%
Falling number: min 230 sec
Wet Gluten Content: min 23%

copied from spec sheet.

[charliep]

I would be carefull in calling low quality. It goes head to head with our 3CWRS and if available for sale, CPS and CWRW in North Africa, Middle East and many South East Asian markets. If your requirement is for use in flat bread or other wheat products, it likely performs quite acceptably perhaps with a little blending of higher quality wheat. A large ocean freight advantage into many of these markets also helps in markets that are very price concious.

I think protein and grade spreads with widen in the new market. Pooling tended to spread the pain among everyone. Will know in 6 months.

Will be interesting to watch the Black sea futures spreads with CBT and KCBT. Trading volumes on the new market will be interesting.

[charliep]

Errol

Do you know if any of the futures quote vendors will publish Black Sea trading information? Not that their trading but hard to find anything on Winnipeg Barley (new contract), wheat or durum other than the end days closes on the ICE futures Canada website accepting that nothing likely happened anyway. Even to have a look at the bid offer spread assuming some activity/interest.

[errolanderson]

Charlie, don't know yet.

CME product . . . so info should be on
their website.

We will try to include a black sea futures
quote on our daily report.

[errolanderson]

June 6th . . . first trades on Black Sea
wheat futures

September $254.50/MT up $9.50/MT
based in U.S. dollars

[LWeber]

It didn't trade.

It was bid and has not seen any bids/offers since.

Other than hedgers, few will have interest in this contract. Right now the risk to is too great unwinding hedge.

Regardless how powerful CME is, they cannot force price discovery; however, they just want volume and could give a fiddler's F about price discovery.