CME To Begin Trading Four Regional Oriented Strand Board Futures Contracts

The Chicago Mercantile Exchange (CME) announced that it will launch separate Oriented Strand Board (OSB) futures and options contracts for the North Central (Chicago), Southeastern (Atlanta), Southwestern (Dallas) and Western (Los Angeles) regions of the U.S. on Wednesday, March 1. Options on the new OSB futures will be eligible for trading on March 2. OSB is generally produced and used within specific geographic regions. In addition to the four delivery regions, new features of the CME's contracts include mill and warehouse delivery as well as truck and rail delivery. Adding warehouse delivery enables wholesalers to more easily participate in the market from either the buy or sell side. Adding truck delivery gives buyers and sellers the use of the form of transportation that is most cost effective. The new contracts replace the current mill- and rail-only delivered contract. "OSB has surpassed plywood for use in new home building and construction and is a nearly $5 billion industry," said Bob Prosi, Chairman of the CME Forest Products Committee and a member of the CME Board. "These contracts were designed with the customer in mind to add more flexibility and convenience." OSB is produced from fast-growing "weed" trees grown and harvested throughout most of North America, making it a modern, environmentally friendly wood product. This panel-type product is used in construction for flooring, roofing and sheathing. Wood chips are layered to form panels that are sized at four feet by eight feet and are 7/16 inches thick (15/32 in Los Angeles) and that rival plywood in strength. Since 1969, the CME has offered trading opportunities in futures and options on random length lumber. The exchange introduced oriented strand board futures and options in 1996. The CME's OSB contracts are sized at 100,000 square feet, which is one boxcar or three truck loads. The trading hours are from 9:00 a.m. until 1:05 p.m. except on the last day of trading when the contracts close at 12:05 p.m. The contract months traded are January, March, May, July, September and November.