Moscow Exchange launches physically-deliverable wheat futures
On 21 December 2020, the Moscow Exchange Derivatives Market launched trading in a deliverable futures contract on wheat. The new instrument was designed in partnership with VTB Capital to meet the needs of various market participants including agricultural producers, processors, wheat exporters as well as banks, brokers and their clients.
The contract is quoted in RUB per ton of class 4 wheat. The contract size is 25 tons. Wheat will be delivered to elevators in the Voronezh region in March, September and December. At the contract launch, the authorized elevators for delivery are Rossosh Elevator and Grain Base of Povorino. The list of elevators will be expanded in future.
VTB Capital acts as the primary market maker for the contract.
Igor Marich, member of the Executive Board, Managing Director for Sales and Business Development at Moscow Exchange, said:
"Russia is the world’s largest grain exporter, and Russian wheat has a big impact on stability of the global grain market. However, there is no universal price benchmark for wheat in Russia. We hope that the new futures will become this benchmark and allow grain market participants to use the convenient and reliable mechanism to hedge price risk."
Atanas Djumaliev, Head of Global Commodities at VTB Capital, said:
"The launch of deliverable wheat futures marks a milestone in the development of the Russian derivatives market. Russia is a major producer and consumer of wheat, and this was the reason why we decided to create a contract with local delivery. Nonetheless, we expect that in future, the deliverable futures will also attract large global players seeking additional opportunities to hedge risk. We continue to streamline the infrastructure and expand the client base; we are confident that the international exposure and expertise of VTB Capital in the sphere of financial and grain markets will facilitate the creation of a liquid contract that will become the main price benchmark for Russian wheat both in Russia and worldwide."
Clearing is carried out by National Clearing Center (NCC), which performs the functions of central counterparty on Moscow Exchange’s markets.
Delivery is performed on the spot market of National Mercantile Exchange (NME, part of Moscow Exchange Group). Only trading and clearing members of NME’s spot market are eligible to deliver under the contract. The minimum delivery volume is 200 t (eight futures contracts). Trades are cleared by National Settlement Depository.