CME Group Inc will list three new contract months in its Black Sea wheat futures market and eliminate a delivery location as the US exchange operator faces a potential challenge from European rival Euronext NV. Chicago-based CME Group on April 27 will list contract expirations for July, September and December 2016, according to a notice sent to customers on Monday. Starting with the July 2016 contract, the company will remove Crimea's Port of Sevastopol as a delivery location.
The changes come days after Reuters reported that Euronext had started working on developing a futures contract that would allow price hedging in Black Sea markets. Production swings in the Black Sea and European Union have become the main drivers of world wheat prices as US farmers have increasingly turned to corn and soybean crops, to the detriment of Chicago wheat futures. CME Group executives "continue to see the Black Sea region as an important wheat market and are actively engaged with market participants," a spokesman in Chicago said. He declined to comment further.
The market operator introduced Black Sea wheat futures in 2012 in its first foray into a non-US-based wheat contract. Two year ago, the company suspended new contact listings because of tensions between Ukraine and Russia. Currently, the only listed contract month is May 2016, and there is no volume or open interest in the market.