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CBOT Black Sea Wheat Futures An effective new pricing tool for trading Black Sea Wheat. Launching Trade Date 6 June, 20121
Overview
CBOT Wheat futures, the world’s most actively traded wheat
As global demand for wheat continues to rise, the world
benchmark.
increasingly has turned to the Black Sea region to fulfill those needs. In 2011-12, wheat produced in the Black Sea region accounted for more than 20 percent of the global wheat export market. By 2021, the U.S. Department of Agriculture (USDA) projects that number could increase to as much as 29 percent of the market.2 The region’s resurgence as a major player in the world wheat trade – along with recent price volatility from regional drought in 2010, highly variable yields and other
Traditional exchange trading hours have been expanded to ensure availability during the underlying markets’ daytime hours, including during USDA World Supply and Demand report releases. And because they are listed electronically on CME Globex, market participants from around the world can benefit from the efficiency of one platform to serve all their world wheat, agricultural and even cross asset-class needs.
factors affecting crop production – has underscored a need that has been underserved by existing wheat contracts: A truly representative pricing tool tied to the Black Sea wheat cash market. To address this need, CME Group is introducing CBOT Black Sea Wheat futures. Whether you’re buying, selling, producing or processing Black Sea wheat, for the first time these contracts will provide an easy and efficient tool for price discovery and price risk management in the region.
Regionally Relevant. Globally Accessible. CME Group has worked closely with industry participants
Features • Directly tied to physical Black Sea wheat prices • Physically delivered through designated Russian, Ukrainian and Romanian ports • Electronically traded on CME Globex, providing access to traders around the world • Regionally relevant trading hours: 10:00 a.m. to 9:15 p.m. GMT + 2 (GMT + 3 daylight savings time) / 2:00 a.m. to 1:15 p.m. Chicago Time (CT)
to construct a contract that truly represents physical grain
• Mitigation of counterparty credit risk via CME Clearing
prices and addresses specific delivery practices and related
• Listed at CBOT and cleared by CME Clearing
risks. Because of their regional focus, these contracts will have much stronger correlations than other listed products, enabling market participants to much more effectively manage risk and discover prices for the Black Sea region. Furthermore, these Black Sea Wheat contracts will facilitate new spreading opportunities with other world wheat markets such as 1 2
Pending CFTC Review. Source: USDA Long-Term Agricultural Projections Report, February 2012.
How the world advances
• More than 100 years of experience developing global benchmarks for agricultural commodity markets
Greater Access to a Growing Market
Black Sea Wheat Production and Share of Global Wheat Trade
20,000
0%
0 00 2
00
20
/2
/2
01
00
20
/2 99
19
20
8 99
99 /1
97 /1
98
19
19
6 19
96
/1
99
99 19
95
/1
/1
19
94 19
/1
93 /
92 19
19
99 /1
/1 91
90
19
19
02 /2 00 20 3 03 /2 00 20 4 04 /2 00 20 5 05 /2 00 20 6 06 /2 00 20 7 07 /2 00 20 8 08 /2 0 20 09 09 /2 01 20 0 10 /2 01 1 20 11 /2 01 2
5%
1
40,000
9
10%
00 0
60,000
99 7
15%
5
80,000
94
20%
99 3
100,000
1
25%
Production (1,000 MT)
Share of Global Trade 120,000
99 2
Share of Global Trade
Production 30%
Source: USDA. Data based on numbers for Russia, Ukraine and Kazakhstan
CME Group: One Platform for All Your Wheat Trading Needs Built on the heritage of CBOT, CME and NYMEX, CME Group is where the world comes to manage risk, and where global wheat traders turn to find effective solutions to their trading needs. CBOT Black Sea Wheat futures expand a comprehensive product suite headlined by CBOT Wheat futures, the world’s most liquid global wheat benchmark, which trades nearly four times the volume of the next alternative (when measured in equivalent terms). Together with active and robust options markets and flexible, centrally cleared OTC Wheat swaps, CME Group provides one platform to capture opportunities and manage exposure for the world’s leading wheat markets.
For more information, contact
NORTH AMERICA (continued)
EUROPE
Susan Sutherland, Senior Director, Agricultural Products
Lisa Kallal, Director, Commercial Sales
+1 312 930 2325
+44 203 379 3725 Dean Noble, Executive Director, Intermediary Sales
Joanna Litchfield, Manager, Agricultural Products +1 312 338 2653
+44 203 379 3732 ASIA
Jeffry Kuijpers, Executive Director, Agricultural Products +44 203 379 3729 For Russian or Ukrainian
Alexandre Bobylov, Manager, Agricultural Products +44 203 379 3734
Gosuke Nakamura, Director, Commercial Sales +65 6593 5578 Patrick Chan, Director, Intermediary Sales +65 6593 5580 Nelson Low, Executive Director, Agricultural Products
NORTH AMERICA
+65 6593 5570
Brenda Tucker, Executive Director, Commercial Sales +1 312 454 8304
Tina Liao, Director, Agricultural Products +65 6593 5569
Barbara Schmidt-Bailey, Director, Intermediary Sales +1 312 634 8356
Contract Specifications CBOT Black Sea Wheat Futures1 Contract Size
136 metric tons (~ 5,000 bushels)
Pricing Unit
U.S. dollars and cents per metric ton
Tick Size
Ten cents ($0.10) per metric ton ($13.60 per contract)
Product
Milling Wheat, in bulk, Free On Board (FOB) Black Sea ports
Contract Months
Jul, Sep, Dec, Mar, May
Last Trading Day
The last business day of the month prior to the contract month
Delivery Day
Business day following the last trading day
Deliverable Grade
Weight: Minimum 770 g/l Moisture: Maximum 14% Grain Impurities: Maximum 8% Protein (on dry matter basis): Minimum 11.5% Wet Gluten Content: Minimum 22% Falling Number: Minimum 230 Foreign Matter: Maximum 2% Bug Damage: Maximum 2%
Trading Hours
Electronically Traded on CME Globex: 10:00 a.m. − 9:15 p.m. GMT + 2 (GMT + 3 daylight savings time) / 2:00 a.m.−1:15 p.m. Chicago Time (CT) Monday – Friday
Ticker Symbol
CME Globex: BSW
Daily Price Limit
$22 per metric ton above or below the previous day’s settlement price.
Exchange Rule
This contract is listed with and subject to the rules and regulations of CBOT.
Delivery Locations
Testing methods shall be in the edition current on the last trading day.
The default delivery locations shall be: Ukraine Russia Port of Illichivsk Port of Novorossiysk Port of Odessa Port of Tuapse Port of Sevastopol Port of Taman Port of Yuzhny Port of Nikolaev
Romania Port of Constanta
Delivery Instrument
Physical delivery between short and long clearing firms during the second half of the delivery month at designated ports.
Margin Requirements
Margin requirements will be determined by CME Clearing based on underlying contract volatility. During the delivery period, Clearing Firms will be required to collect delivery margins from firms making or taking delivery, to be held until physical load-out and payment are complete.
Delivery Differentials
All deliveries are at par
Load-Out
Load-out shall be any period of three consecutive days between the 15th and final day of the delivery month. • The buyer shall give nomination of vessel with not less than 10 consecutive day’s notice before the vessel’s ETA. • The seller shall declare the port and berth for load-out not less than 2 days prior to the start of the three-day loading window. • The buyer shall present a Notice of Readiness upon the vessel’s arrival at port before the first day of the three-day loading window. Load-out may occur at any time during the three-day loading window or when a berth becomes available, whichever is later. Seller shall guarantee loading rate of 10,000 metric tons per day. • Seller shall pay demurrage if loading is slower than the guaranteed loading rate. Loading shall be in accordance with the custom of the port of loading.
Delivery and Load-Out Details
Additional details related to delivery procedures, including premium (storage) rates, load-out procedures, processes addressing export prohibitions and more are available in the rulebook for CBOT Black Sea Wheat futures and delivery guide.
Pending CFTC review.
1
To learn more, visit cmegroup.com/bsw
CME Group REGIONAL offices
CME Group headquarters
20 South Wacker Drive Chicago, Illinois 60606 cmegroup.com
[email protected] +1 800 331 3332 +1 312 930 1000
New York
London
Singapore
+1 212 299 2000
+44 20 7796 7100
+65 6322 8595
Calgary
Houston
São Paulo
403 444 6876
+1 713 658 9292
+55 11 2565 5999
Seoul
Tokyo
Washington D.C.
+82 2 2076 8470
+81 3 5403 4828
+1 202 638 3838
References to CME Clearing are to CME’s U.S. Clearinghouse. Futures trading is not suitable for all investors, and involves the risk of loss. Futures are a leveraged investment, and because only a percentage of a contract’s value is required to trade, it is possible to lose more than the amount of money initially deposited for a futures position. Therefore, traders should only use funds that they can afford to lose without affecting their lifestyles. And only a portion of those funds should be devoted to any one trade because a trader cannot expect to profit on every trade. All references to options in this brochure refer to options on futures. CME Group is a trademark of CME Group Inc. The Globe logo, CME, Chicago Mercantile Exchange and Globex are trademarks of Chicago Mercantile Exchange Inc. CBOT and Chicago Board of Trade are trademarks of the Board of Trade of the City of Chicago. All other trademarks are the property of their respective owners. Further information about CME Group and its products can be found at cmegroup.com. The information within this document has been compiled by CME Group for general purposes only and has not taken into account the specific situations of any recipients of the information. CME Group assumes no responsibility for any errors or omissions. Additionally, all examples contained herein are hypothetical situations, used for explanation purposes only, and should not be considered investment advice or the results of actual market experience. All matters pertaining to rules and specifications herein are made subject to and are superseded by official CME, NYMEX and CBOT rules. Current CME/CBOT/NYMEX rules should be consulted in all cases before taking any action. Copyright © 2012 CME Group. All rights reserved. AC004/300/0412
CBOT Black Sea Wheat Futures An effective new pricing tool for trading Black Sea Wheat. Launching Trade Date 6 June, 20121
Overview
CBOT Wheat futures, the world’s most actively traded wheat
As global demand for wheat continues to rise, the world
benchmark.
increasingly has turned to the Black Sea region to fulfill those needs. In 2011-12, wheat produced in the Black Sea region accounted for more than 20 percent of the global wheat export market. By 2021, the U.S. Department of Agriculture (USDA) projects that number could increase to as much as 29 percent of the market.2 The region’s resurgence as a major player in the world wheat trade – along with recent price volatility from regional drought in 2010, highly variable yields and other
Traditional exchange trading hours have been expanded to ensure availability during the underlying markets’ daytime hours, including during USDA World Supply and Demand report releases. And because they are listed electronically on CME Globex, market participants from around the world can benefit from the efficiency of one platform to serve all their world wheat, agricultural and even cross asset-class needs.
factors affecting crop production – has underscored a need that has been underserved by existing wheat contracts: A truly representative pricing tool tied to the Black Sea wheat cash market. To address this need, CME Group is introducing CBOT Black Sea Wheat futures. Whether you’re buying, selling, producing or processing Black Sea wheat, for the first time these contracts will provide an easy and efficient tool for price discovery and price risk management in the region.
Regionally Relevant. Globally Accessible. CME Group has worked closely with industry participants
Features • Directly tied to physical Black Sea wheat prices • Physically delivered through designated Russian, Ukrainian and Romanian ports • Electronically traded on CME Globex, providing access to traders around the world • Regionally relevant trading hours: 10:00 a.m. to 9:15 p.m. GMT + 2 (GMT + 3 daylight savings time) / 2:00 a.m. to 1:15 p.m. Chicago Time (CT)
to construct a contract that truly represents physical grain
• Mitigation of counterparty credit risk via CME Clearing
prices and addresses specific delivery practices and related
• Listed at CBOT and cleared by CME Clearing
risks. Because of their regional focus, these contracts will have much stronger correlations than other listed products, enabling market participants to much more effectively manage risk and discover prices for the Black Sea region. Furthermore, these Black Sea Wheat contracts will facilitate new spreading opportunities with other world wheat markets such as 1 2
Pending CFTC Review. Source: USDA Long-Term Agricultural Projections Report, February 2012.
How the world advances
• More than 100 years of experience developing global benchmarks for agricultural commodity markets
Greater Access to a Growing Market
Black Sea Wheat Production and Share of Global Wheat Trade
20,000
0%
0 00 2
00
20
/2
/2
01
00
20
/2 99
19
20
8 99
99 /1
97 /1
98
19
19
6 19
96
/1
99
99 19
95
/1
/1
19
94 19
/1
93 /
92 19
19
99 /1
/1 91
90
19
19
02 /2 00 20 3 03 /2 00 20 4 04 /2 00 20 5 05 /2 00 20 6 06 /2 00 20 7 07 /2 00 20 8 08 /2 0 20 09 09 /2 01 20 0 10 /2 01 1 20 11 /2 01 2
5%
1
40,000
9
10%
00 0
60,000
99 7
15%
5
80,000
94
20%
99 3
100,000
1
25%
Production (1,000 MT)
Share of Global Trade 120,000
99 2
Share of Global Trade
Production 30%
Source: USDA. Data based on numbers for Russia, Ukraine and Kazakhstan
CME Group: One Platform for All Your Wheat Trading Needs Built on the heritage of CBOT, CME and NYMEX, CME Group is where the world comes to manage risk, and where global wheat traders turn to find effective solutions to their trading needs. CBOT Black Sea Wheat futures expand a comprehensive product suite headlined by CBOT Wheat futures, the world’s most liquid global wheat benchmark, which trades nearly four times the volume of the next alternative (when measured in equivalent terms). Together with active and robust options markets and flexible, centrally cleared OTC Wheat swaps, CME Group provides one platform to capture opportunities and manage exposure for the world’s leading wheat markets.
For more information, contact
NORTH AMERICA (continued)
EUROPE
Susan Sutherland, Senior Director, Agricultural Products
Lisa Kallal, Director, Commercial Sales
+1 312 930 2325
+44 203 379 3725 Dean Noble, Executive Director, Intermediary Sales
Joanna Litchfield, Manager, Agricultural Products +1 312 338 2653
+44 203 379 3732 ASIA
Jeffry Kuijpers, Executive Director, Agricultural Products +44 203 379 3729 For Russian or Ukrainian
Alexandre Bobylov, Manager, Agricultural Products +44 203 379 3734
Gosuke Nakamura, Director, Commercial Sales +65 6593 5578 Patrick Chan, Director, Intermediary Sales +65 6593 5580 Nelson Low, Executive Director, Agricultural Products
NORTH AMERICA
+65 6593 5570
Brenda Tucker, Executive Director, Commercial Sales +1 312 454 8304
Tina Liao, Director, Agricultural Products +65 6593 5569
Barbara Schmidt-Bailey, Director, Intermediary Sales +1 312 634 8356
Contract Specifications CBOT Black Sea Wheat Futures1 Contract Size
136 metric tons (~ 5,000 bushels)
Pricing Unit
U.S. dollars and cents per metric ton
Tick Size
Ten cents ($0.10) per metric ton ($13.60 per contract)
Product
Milling Wheat, in bulk, Free On Board (FOB) Black Sea ports
Contract Months
Jul, Sep, Dec, Mar, May
Last Trading Day
The last business day of the month prior to the contract month
Delivery Day
Business day following the last trading day
Deliverable Grade
Weight: Minimum 770 g/l Moisture: Maximum 14% Grain Impurities: Maximum 8% Protein (on dry matter basis): Minimum 11.5% Wet Gluten Content: Minimum 22% Falling Number: Minimum 230 Foreign Matter: Maximum 2% Bug Damage: Maximum 2%
Trading Hours
Electronically Traded on CME Globex: 10:00 a.m. − 9:15 p.m. GMT + 2 (GMT + 3 daylight savings time) / 2:00 a.m.−1:15 p.m. Chicago Time (CT) Monday – Friday
Ticker Symbol
CME Globex: BSW
Daily Price Limit
$22 per metric ton above or below the previous day’s settlement price.
Exchange Rule
This contract is listed with and subject to the rules and regulations of CBOT.
Delivery Locations
Testing methods shall be in the edition current on the last trading day.
The default delivery locations shall be: Ukraine Russia Port of Illichivsk Port of Novorossiysk Port of Odessa Port of Tuapse Port of Sevastopol Port of Taman Port of Yuzhny Port of Nikolaev
Romania Port of Constanta
Delivery Instrument
Physical delivery between short and long clearing firms during the second half of the delivery month at designated ports.
Margin Requirements
Margin requirements will be determined by CME Clearing based on underlying contract volatility. During the delivery period, Clearing Firms will be required to collect delivery margins from firms making or taking delivery, to be held until physical load-out and payment are complete.
Delivery Differentials
All deliveries are at par
Load-Out
Load-out shall be any period of three consecutive days between the 15th and final day of the delivery month. • The buyer shall give nomination of vessel with not less than 10 consecutive day’s notice before the vessel’s ETA. • The seller shall declare the port and berth for load-out not less than 2 days prior to the start of the three-day loading window. • The buyer shall present a Notice of Readiness upon the vessel’s arrival at port before the first day of the three-day loading window. Load-out may occur at any time during the three-day loading window or when a berth becomes available, whichever is later. Seller shall guarantee loading rate of 10,000 metric tons per day. • Seller shall pay demurrage if loading is slower than the guaranteed loading rate. Loading shall be in accordance with the custom of the port of loading.
Delivery and Load-Out Details
Additional details related to delivery procedures, including premium (storage) rates, load-out procedures, processes addressing export prohibitions and more are available in the rulebook for CBOT Black Sea Wheat futures and delivery guide.
Pending CFTC review.
1
To learn more, visit cmegroup.com/bsw
CME Group REGIONAL offices
CME Group headquarters
20 South Wacker Drive Chicago, Illinois 60606 cmegroup.com
[email protected] +1 800 331 3332 +1 312 930 1000
New York
London
Singapore
+1 212 299 2000
+44 20 7796 7100
+65 6322 8595
Calgary
Houston
São Paulo
403 444 6876
+1 713 658 9292
+55 11 2565 5999
Seoul
Tokyo
Washington D.C.
+82 2 2076 8470
+81 3 5403 4828
+1 202 638 3838
References to CME Clearing are to CME’s U.S. Clearinghouse. Futures trading is not suitable for all investors, and involves the risk of loss. Futures are a leveraged investment, and because only a percentage of a contract’s value is required to trade, it is possible to lose more than the amount of money initially deposited for a futures position. Therefore, traders should only use funds that they can afford to lose without affecting their lifestyles. And only a portion of those funds should be devoted to any one trade because a trader cannot expect to profit on every trade. All references to options in this brochure refer to options on futures. CME Group is a trademark of CME Group Inc. The Globe logo, CME, Chicago Mercantile Exchange and Globex are trademarks of Chicago Mercantile Exchange Inc. CBOT and Chicago Board of Trade are trademarks of the Board of Trade of the City of Chicago. All other trademarks are the property of their respective owners. Further information about CME Group and its products can be found at cmegroup.com. The information within this document has been compiled by CME Group for general purposes only and has not taken into account the specific situations of any recipients of the information. CME Group assumes no responsibility for any errors or omissions. Additionally, all examples contained herein are hypothetical situations, used for explanation purposes only, and should not be considered investment advice or the results of actual market experience. All matters pertaining to rules and specifications herein are made subject to and are superseded by official CME, NYMEX and CBOT rules. Current CME/CBOT/NYMEX rules should be consulted in all cases before taking any action. Copyright © 2012 CME Group. All rights reserved. AC004/300/0412
