May 13, 2010
JOHANNESBURG and CHICAGO, 13 MAY 2010 –The JSE is to introduce cash-settled soybean, soymeal and soybean oil derivative contracts based on CBOT settlement prices licensed from CME Group, the world’s largest and most diverse derivatives marketplace. The new products will allow local farmers, processors and importers to hedge their price risk against the international benchmarks. These contracts will be listed, traded and settled by the JSE, starting Monday 17 May 2010.
The JSE’s cash-settled soya contracts will give local market participants a tool to access international prices, adding a wider choice of hedging options according to their risk-management needs. The JSE currently trades a physically settled 25 ton soya bean contract which serves the local market. By adding the cash settled soybean products, local producers especially will have the flexibility to either hedge on the physically settled local market (based on local fundamentals) or the cash settled global market (based on international fundamentals).
The soybean is a rich source of protein which yields meal and oil in the crushing process. Soybean meal is a low-cost, high-protein animal feed that is widely used in South Africa. Last year South Africa imported approximately 1 million tons of meal. “While we do produce soya locally, we import a significant amount of meal to satisfy local animal protein requirements exposing importers and downstream market participants to international price fluctuations. Having a product based on a US soya market, the world’s largest producer and exporter of soybeans, will give local market participants a tool to hedge against this price risk,” comments Rod Gravelet-Blondin, Senior General Manager of Commodities at the JSE.
The three new standardised soya derivative contracts to be traded on the JSE will represent 100 metric tons for soybeans and soymeal and 25 tons for soybean oil. The new contracts will allow feed manufacturers, importers and the local oilseed crushing community the opportunity to use one or all three of the new products in their price risk management strategies.
The United States produces more than a third of the world’s soybean crop, followed by Brazil and Argentina. Global demand for soya continues to grow largely attributable to the rapid growth and development of Asian economies.
“The fruitful relationship between JSE and CME Group continues to grow with the introduction of three new soybean contracts based on CBOT’s global benchmark prices,” said Bryan Durkin, Chief Operating Officer and Managing Director of Products and Services at CME Group. “With food prices an ever-present challenge for both emerging and established economies, these new contracts underline our commitment to working with our strategic partners worldwide to develop effective risk-management tools.”
FOR FURTHER INFORMATION PLEASE CONTACT:
On behalf of
Senior General Manager: Commodities at the JSE
(011) 520 7000
Tel: +44 (207) 796 7112
About JSE Limited
As South Africa’s only full service securities exchange, the JSE connects buyers and sellers in four different financial markets, namely equities, equity derivatives, commodity derivatives and interest rate products. The JSE Ltd offers the investor a truly first world trading environment, with world class technology, surveillance and settlement in an emerging market context. It is amongst the top 20 largest equities exchanges in terms of market capitalisation in the world. For further information, please visit www.jse.co.za
About CME Group
As the world's leading and most diverse derivatives marketplace, CME Group (www.cmegroup.com) is where the world comes to manage risk. CME Group exchanges offer the widest range of global benchmark products across all major asset classes, including futures and options based on interest rates, equity indexes, foreign exchange, energy, agricultural commodities, metals, weather and real estate. CME Group brings buyers and sellers together through its CME Globex® electronic trading platform and its trading facilities in New York and Chicago. CME Group also operates CME Clearing, one of the largest central counterparty clearing services in the world, which provides clearing and settlement services for exchange-traded contracts, as well as for over-the-counter derivatives transactions through CME ClearPort®. These products and services ensure that businesses everywhere can substantially mitigate counterparty credit risk in both listed and over-the-counter derivatives markets