CME Group, a financial markets operator, is developing plans to create a Black Sea Wheat Futures Contract that tracks Romanian and Bulgarian wheat prices.

CME, the company that has U.S. Corn, Wheat and Soybean Futures that serve as global benchmarks for prices, has suspended trading of its Black Sea Wheat futures, which were based on Russian price indexes, following the invasion of Ukraine.

Romania and Bulgaria, members of the European Union, have increased their exports in recent years.

Traders said that the new product will be tied to an index of export price for 12,5% protein wheat within the "CVB zone" which includes the Romanian ports of Constanta and Varna and Burgas and the Bulgarian Ports of Varna.

The draft document that was seen by revealed that the futures were to be settled in cash, not physically delivered, and priced in U.S. Dollars. They would also trade in 50-metric-ton lots.

CME consultations cited by traders indicated that they expected the product to be available in time for the summer harvest.

They added that it was unclear if CME would proceed with the contract or if any changes could be made to the proposed specifications.

CME's spokesperson stated that they "always talk to our clients about their risk management needs" but could not comment on the development of any specific product.

CME, like Euronext, has explored options for developing the Black Sea Region since years. Traders have said that CME has considered Romania as an option, following the war in Ukraine.

In addition to good harvests, and competitive prices for wheat from Romania and Bulgaria, the war-related risks that affect Russian and Ukrainian supplies as well as a disastrous harvest in France last year have increased buyer interest.

The United States' efforts to negotiate ceasefires have also raised the possibility that the market conditions in Russia and Ukraine could stabilise once again.

CME launched several new grain products over the past few months. These include U.S. Spring Wheat Futures, which will be available next month, and contracts to trade price spreads for CME and Euronext Futures. Reporting by Gus Trompiz, Sybille De La Hamaide and Kirby Donovan.

(source: Reuters)