JSE Extends Licensing Agreement with CME Group to Include
Wheat Referencing the Chicago Board of Trade
July 06, 2011
JOHANNESBURG, 5 July 2011 – Today Johannesburg Stock
Exchange (JSE) announced its plans to introduce a foreign-referenced wheat
contract to the portfolio of commodities it offers under licence from the CME
Group. The new contract, based on soft red winter wheat of the Chicago Board of
Trade, a different quality standard to the South African produced wheat,
provides local market participants with an alternative product should they see
trading opportunities arising on this international benchmark. The contract will
be introduced for trading this morning, 5 July 2011 with the following expiries,
September 2011, December 2011 and March 2012.
Senior General Manager: Commodities at the JSE says, “Wheat is appealing as an
investable asset for several reasons: as a staple crop it is an important
component of everyday life across the globe and used in a variety of foodstuffs.
Our existing wheat contract is the JSE’s second most liquid agricultural
product, so it not surprising that we received several requests to include an
internationally referenced, rand-settled contract on wheat.” The product will
reference pricing from the Chicago Board of Trade, which is operated by the CME
“It’s important for global market participants to be able to
manage both commodity and currency risk,” said Tim Andriesen, Managing Director
of Agricultural Products and Alternative Investments for the CME Group.
“Supporting the JSE’s work to develop Rand-denominated products indexed to our
benchmark futures provides an extremely effective hedging tool for producers,
storage and shipping companies, and others in the agricultural supply chain.”
The current range of foreign-referenced soft commodity contracts under
license from the CME Group includes corn and a soybean complex. The ongoing
relationship with the CME Group, one of the world’s leading and most diverse
derivatives exchange, has meant that local traders have had access to global
commodity markets since 2008.
With a contract size of 50 metric tons,
the product mirrors the existing local wheat contract including the same set of
expiry months. “A recent trend indicates an uptake in wheat futures based on
concerns that dry weather could reduce global output,” says Gravelet-Blondin.
Further demand from emerging markets could also drive the price of wheat higher.
“With these increasingly volatile commodity prices, access to reliable risk
management tools is essential,” adds Gravelet-Blondin.
For those who wish to
include in their investment portfolios an international wheat position, the
locally listed contract will make it easier for them to gain access. Similar to
the other foreign referenced commodities already active, market makers namely
ABSA Capital, Nedbank Capital and Rand Merchant Bank will ensure active price
quoting off the liquidity of the international market. Individual investors and
corporate entities are able to invest with no position limits. Pension fund
managers and long term insurance funds are subject to their 25% foreign
allocation limits. And asset managers and collective investment schemes will be
subject to their 35% foreign allocation limits.
CME Group and the JSE also
have an existing license agreement for gold, platinum, copper, silver and WTI
FOR FURTHER INFORMATION PLEASE CONTACT:
Williams / Renata Da Silva
Corporate Communications Consultants
(011) 463 2198
Email: firstname.lastname@example.org / email@example.com
Senior General Manager: Commodities at the JSE
Tel (011) 520 7258
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