January 28, 2009

 

South African Exchange creates corn contract based on CME

CME Group (CME) said Tuesday (January 27) it signed a license agreement with the Johannesburg Stock Exchange to create a corn futures contract for the South African exchange.

 

Through the agreement, JSE will take Chicago Board of Trade corn futures settlement prices and use them for a new cash-settled product, said Mary Haffenberg, CME Group spokeswoman.

 

"It's our prices," said Haffenberg. "They list it, they trade it, they settle it."

 

The JSE currently has a domestic corn futures contract but the focus is domestic. The new cash-settled contract will be international-based and use the CBOT prices, which are considered the global benchmark. The JSE exchange will introduce new May, July and September 2009 corn contracts on Wednesday.

 

A JSE official said in a press release the agreement will "promote deeper, more liquid markets in our domestic maize futures contracts."

 

A CME Group press release said the agreement will allow South Africans to manage price risk and to realize "spread opportunities between USA corn and South African white corn and/or yellow corn," among other benefits.

 

The US Department of Agriculture estimated South Africa will produce 10.5 million tonnes of corn in the 2008-09 marketing year and will export 2.5 million tonnes of that. South Africa exports most of its corn to other African countries, according to USDA.

 

Ethiopian Commodities Exchange, the continent's first commodities mart launched in April 2008, a spot market exchange reportedly modelled on the Chicago Board of Trade that operates markets in wheat, corn, teff, coffee, pea beans, kidney beans and sesame.

 

Last year CME Group was working with Sher Karuturi Ltd., a floral-focused company based in Kenya, to develop agricultural futures trading in the region.